LONDON, Sept 30 (Reuters) – The financial collapse of Banco Espirito Santo, once Portugal’s largest listed lender, has complicated efforts to attract foreign investors to the country, Economy Minister Antonio Pires de Lima said on Tuesday (30-09-2014), during an investor conference in London.
“If I could have avoided this, I would. In trying to convince investors to put their money in the Portuguese economy, our task has become harder,” Pires de Lima told Banco Espirito Santo had to be rescued by the state in early August after the collapse of the business empire of its founding Espirito Santo family.
A good bank, Novo Banco, was carved out of BES and capitalized to the tune of 4.9 billion euros, including 3.9 billion euros in public funds.
The state now hopes to sell Novo Banco to investors to recover the rescue funds and wind down the “bad bank” that inherited the toxic exposure to the indebted family businesses.
Pires de Lima said he had full faith in Novo Banco’s new management team led by Eduardo Stock da Cunha, but declined to be drawn further on the process of restoring the bank’s fortunes, adding this was a matter for the central bank.
He did say, however, that many BES assets are now “cheap” after falling sharply on the stock market over the summer. “But the Portuguese economy is much more than BES,” he said, noting exports continue to grow, albeit at a slower pace than he would like.
Deputy central bank governor Pedro Duarte Neves told the conference that exports will hit 45 percent of gross domestic product within three years, beating last year’s record 41 percent and on track to meet the country’s target of 50 percent of GDP by the end of the decade.
Pires de Lima repeated the government’s economic growth forecast of 1 percent for this year after exiting its bailout programme in May, the first year of growth following three years of recession.
This will rise to 1.5 percent next year and 1.7 percent in 2016, he said, welcoming the sharp slide in government borrowing costs to the lowest on record, which will ease the burden of managing the country’s heavy public debt load.
“Interest rates of 3-4 percent makes a difficult task more manageable, and makes investment in Portugal much more attractive,” he said. (Reporting by Emelia Sithole-Matarise and Jamie McGeever; Editing by Jamie McGeever and Tom Heneghan)
