BANIF sold to Banco Santander for 150 million €

Second bailout of a bank in Portugal in a year and a half after rescue of Banco Espírito Santo in August 2014
Wednesday, 23 December 2015 | Banking

The Portuguese BANIF (Banco Internacional do Funchal) will be split into a “good” and “bad” bank, with its healthy assets sold to Banco Santander of Spain as part of a state-backed rescue, Portugal’s central bank said on Sunday. The need for the rescue came after Banif had trouble repaying an injection of 1.1 billion € from the Portuguese government in 2013. That deal involved the government taking a majority stake in the lender.

Banco Internacional do Funchal will receive an injection of €2.26 billion for future contingencies as part of the new bailout, which was approved by European authorities on Monday. The Banco Espírito Santo rescue included €4.9 billion in capital. The Bank of Portugal, the central bank, said the rescue and sale of the healthy assets would protect Banco Internacional do Funchal’s depositors and senior creditors and would allow “normal operation of service.”

The Portuguese government will contribute about €1.77 billion, and the remaining €489 million will come from a resolution fund, which is bankrolled by financial institutions. The aid could reach as much as €3 billion, including the transfer of certain impaired assets to an asset-management vehicle and state guarantees related to units that are part of the Santander sale, the European Commission said on Monday.

Santander will pay €150 million for Banco Internacional do Funchal assets and certain liabilities, and it will transfer them to its Santander Totta unit.