The European Central Bank (ECB) has directed Portugal’s Novo Banco to plug a EUR1.4bn capital gap following a stress test conducted as a follow-through on wider checks last year.
Novo Banco is the good-bank created on August last year to rescue the assets and liabilities of collapsed lender Banco Espírito Santo.
Go deeper with GlobalData
The test revealed that Novo Banco had a EUR1.4bn capital hole under an adverse scenario that simulates an economic recession, even though it met capital requirements under its base scenario.
The regulator has offered the bank two weeks to submit an action plan and nine months to redress its funding gap.
Novo Banco had already started working on a plan to raise capital through asset sales to meet the capital gap, The Bank of Portugal said in a statement.
The plan would include sale of Novo Banco’s stake in life insurer GNB Vida, as well as other non-core assets.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe move is expected to further delay the planned sale of Novo Banco after the central bank cancelled an auction in September.
The stress test conducted by ECB assessed nine eurozone banks apart from Novo Banco including Banque Degroof, Agence Française de Développement, J.P. Morgan Bank Luxembourg, Mediterranean Bank, Sberbank Europe, VTB Bank (Austria), UniCredit Banka Slovenija, Kuntarahoitus.
