Banif. As the bank was the background – iOnline

It is not easy to identify the precise moment when the difficulties of Banif reached the point of no return, but the beginning of the real estate crisis, yet in the past decade, was a decisive contribution. A bank with a large exposure to small and medium enterprises in the construction area, the market fall unto years of agony.

 
 

Founded by Madeira Horacio Roque, Banif has large deployment in Funchal. For decades grew to ride the construction boom – financed works of the Regional Government of Madeira -. And expanded to many other geographies

 
 

When the tap closed, all it deteriorated. The construction companies that Banif financed entered in increasing difficulties and unpaid debts to the bank began to increase.

 
 

Inspections of the Bank of Portugal, before public subsidies 2013, showed that Banif was one of the most exposed banks to construction and real estate, followed by BCP. There was also a high concentration of credit to small and medium enterprises, where the bad debt came to be five times higher than large companies during the crisis.

 
 

Although small in the Portuguese financial system, the group’s holdings network had some complexity and cross-financing operations within the group made the entire top structure permeable to financial imbalances in specific companies of the group.

 
 

At the height of the crisis and the troika program in obvious problems with non-compliance, the bank applied for public aid. There was a line troika to help banks and, as in CGD, the BPI and BCP, the Madeiran bank was supported. A recapitalization plan totaling 1.1 billion euros was approved, and in return the bank would have to implement a restructuring plan.

 
 

It would have to sell non-core businesses and businesses in unprofitable markets, as the repayments of the aid was being made.

 
 

It was to run well – were captured private investors in capital increases, payments were being made and companies sold – but an episode proved to be critical: the collapse of the BES, which reversed the recovery path .

 
 

The Madeira bank had 120 million euros applied in a cross-operating with the Bank of Salgado and resolution as the bank in mid-2014, has generated losses that amount.

 
 

With other impairments recorded however, the deviation from the initial plan became apparent. In December 2014, the bank failed to pay the state the money he owed. Coincidence or not, which Banif failed to pay the state at that time is close to the bank lost with the fall of BES:. EUR 125 million to the public coffers not yet recovered

 
 

The Passos Coelho government pondered several times to sell the bank – was spoken in the possibility of investment Equatorial Guinea – but nothing became of interest. When potential buyers saw the institution’s accounts, the reverse was almost immediate.

 
 

Then begins to take shape the attempt to isolate the real estate assets of the group, a financial vehicle such as those created with the BPN, so that bank accounts could be purged of these troubled assets, weighing on capital ratios imposed by the ECB.

 
 

The race against time accentuated this week, after speculation about the bank’s restructuring. With the final attempt of sale in progress, the fragile state of the institution should dictate price ‘balance’.

 John Wood