Novo Banco’s losses continue with more cuts planned
The mid-October acquisition of Novo Banco by US vulture fund Lone Star came at the end of the third quarter where losses of €420 million have been announced.
The January to September trading period saw losses climb 8.9% over the same period last year, with 390 staff leaving and 58 branches closing.
Novo Banco had 5,297 employees in Portugal at the end of September, down 390 from the 2016 year end operating from 449 branches.
The bank, led by António Ramalho, disclosed that pre-tax losses were €355.6 million, but “in view of the decision not to record additional deferred taxes, the net result was losses of €419.2 million, 8.9% worse than the same period last year.
The bank reduced its operating costs by 12.4% compared to the same period in 2016 due to “improvements made in the simplification of processes and the optimisation of structures with a consequent reduction of branches and staff.
Novo Banco was handed over to Lone Star which holds 75% of the bank’s shares, the balance being held by the Resolution Fund on behalf of Portugal’s banks.
Prior to sale of Novo Banco, a five year restructuring plan was negotiated with the European Commission, which included commitments to concentrate operations in Portugal and Spain, to sell off or discontinuance overseas operations and sell off insurance company subsidiaries.
Measures to increase revenues and to reduce costs are also planned, the cost-cutting one involving a further reduction in the workforce of 500 members of staff by 2021. Since August 2014, when Novo Banco was created, the workforce has been cut by more than 2,000 workers.
Lone Star has yet to make any announcements but is unlikely to be happy with such huge trading losses with an accelerated turn-around process expected now that the ink is dry on the controversial deal.
The above content produced by swissinfo.ch is not intended for commercial use and may not be republished by third parties either wholly or in part.