Novo Banco CEO sees no new capital need, deposits recovering
LISBON (Reuters) - The first balance sheet of Portugal's Novo Banco, the successor to Banco Espirito Santo following a state rescue in August, will show solvency ratios above the required threshold and no need for additional capital, its chief executive said.
Eduardo Stock da Cunha told reporters on Thursday the bank's deposits were recovering after a drop in the wake of the rescue that split BES into the working Novo Banco and a "bad bank" exposed to liabilities of its founding Espirito Santo family.
The state rescued Portugal's largest listed lender in early August with a 4.9 billion euro (3.88 billion pounds) package, mostly in public funds, after the business empire of the Espirito Santos collapsed under a mountain of debt.
Stock da Cunha, who became CEO in mid-September after working for Britain's Lloyds Banking Group, confirmed what sources told Reuters last month -- that the common equity Tier 1 capital ratio will be comfortably above the minimum 7 percent required by the Bank of Portugal.
Some analysts have had doubts whether the capital injected into Novo Banco is enough to guarantee adequate solvency as required by Portuguese and European regulators.
"Novo Banco is back ... we are growing our deposits, giving loans, we're happy with what we are," he said. "The ratios (targets) will be met," he said, adding that the opening balance will come out in the coming days.
When it devised the rescue plan, the Bank of Portugal said the capitalisation would leave Novo Banco with an 8.5 percent capital ratio.
"What I'm focused on at Novo Banco is recovering its franchise, increase the bank's value, recover the deposits, which is already happening and to keep loans flowing to the economy," Stock da Cunha said.
The state plans to sell Novo Banco to recover the rescue funds.
(Reporting By Sergio Goncalves, writing by Andrei Khalip; editing by Keith Weir)
