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It is one of the operations that gave the buyer the most benefit. Tranquilidade, whose sale was agreed in 2014, with the closure The sale to be carried out in January 2015 is one of the operations found in Deloitte’s analysis of Novo Banco’s management acts, Jornal Economico learned.
The bank was still run by Vítor Bento when Tranquilidade was sold to Apollo Global Management in 2014, but it was Eduardo Stock da Cunha who closed the deal four months after the North American manager of Private capital and that Novo Banco, which had a lien on the company, agreed on the terms of the transaction. A delay to which a precautionary measure filed by a group of creditors of Grupo Financiero Espírito Santo (ESFG) contributed.
Novo Banco invested around 40 million euros at that time. In addition, Apollo promised to inject around 150 million in Tranquilidade through a capital increase whose purpose was to compensate for the fact that part of the company’s technical reserves are represented by loans in GES that, with the collapse of the group, had a null value.
Four years later, in 2019, Apollo agreed to sell the company to Generali in July. The Italian insurer, with a reduced presence in Portugal, pays 510 million euros for Seguradoras Unidas and 90 million for its AdvanceCare.
The fact that Apollo sold the Seguradoras Unidas group (which combined Tranquilidade and Açoreana) and AdvanceCare to the Italian Generali for 600 million euros, much more than what it paid in January 2015 for Tranquilidade, at a time when the insurer still He had all the buildings in his real estate portfolio, which in the meantime were sold, has been the subject of much public criticism, coming from various sectors.
This transaction should be left out of Deloitte’s audit, among other things because it was not covered by the contingent capitalization mechanism of the Resolution Fund and as such does not justify capital calls from an entity that is accounted for as a public entity. But, since the audit that was delivered yesterday to the Ministry of Finance has already passed midnight, it is not limited to the period of losses, it also analyzes the operations from their origin and therefore covers the period from 2000 to 2018, it also covered this sale .
However, this feature has special contours. In the first place, because the bank takes possession of the asset by executing a loan that it had with the owner of Tranquilidade, Grupo Financiero Espírito Santo, and because the proceeds of the sale went to the bankrupt estate of the executed company, as explained to Economic Jornal. informed source of the process.
In fact, Tranquilidade was not included in the assets transferred to Novo Banco, at the date of the resolution (August 3, 2014), since the insurance company was owned by Espírito Santo Financial Group, which entered bankruptcy.
The completion of the sale of Tranquilidade in January 2015 was only possible after Centerbridge, an investor in ESFG debt, withdrew from the lawsuit in which it challenged Tranquilidade’s financial pledge in favor of Novo Banco, as reported by “Jornal business. “As soon as the process fell, the bank, at that time led by Eduardo Stock da Cunha and Apollo, closed the deal. Thus, four months passed between the agreement signed with Apollo and the closure of the sale, since the precautionary measure of Centerbridge and other creditors of the ESFG prevented the conclusion of the agreement in 2014, as was initially planned, even in the term of Vítor Bento.
Why Tranquilidade, which on March 14, 2014, as part of the ETRICC 2 exercise, carried out by the auditor PriceWaterhouseCoopers (PwC), at the request of the Bank of Portugal, was valued at 700 million euros, ended up being worth about 190 million euros euros (44 million sales plus 150 million capital increase)? Subsequently, everything rushed into GES and this affected the value of Tranquilidade, which in 2014 was under threat of being liquidated by the regulator.
The case dates back to 2014. Before the bankruptcy of the Espírito Santo Group (GES), the insurer underwritten GES products to finance the shareholder of 150 million euros. When the group went down, it left that hole in Tranquilidade’s accounts, leading to an investigation by the insurance supervisor.
The operation was requested at the time by the then president of BES, Ricardo Salgado, without being deliberated by the executive committee of Tranquilidade, at that time led by Pedro Brito e Cunha.
The insurance supervisor, at that time led by José Almaça and chaired by Margarida Corrêa de Aguiar, opened an investigation process into this operation that left Tranquilidade in technical bankruptcy. But it was the president of the Superintendency of Insurance and Pension Funds (ASF), in an interview with the weekly “Expresso” that recently revealed “that an investigation process was opened by the Authority, but that it would end up archived for lack of legal provision for its application. of an administrative offense ”.
According to the magazine “Visão”, in 2014 the Bank of Portugal demanded that Tranquilidade shares be delivered to BES as a guarantee of a credit line of 48.5 million euros, used to settle Rioforte’s commercial papers between 1 and December 15. July 2014. In other words, the Tranquilidade shares, valued at 700 million euros a few months earlier, became a guarantee that the loan of 48.5 million euros would be paid.
In the days prior to the fall of BES, and in the face of pressure to liquidate the commercial paper, ESFG requested a loan from Tranquilidade, for the amount of 150 million euros. On July 20, 2014, the insurance supervisor takes a drastic step and threatens to revoke the authorization that allowed Tranquilidade to continue operating. That was what led to the emergence of the sale to Apollo, which predisposed them to inject those 150 million euros into the insurer and to present a proposal to purchase the pledged shares of Tranquilidade.
This operation is evaluated in Deloitte’s audit of the management acts at BES and Novo Banco, which covers a period of 18 years, between 2000 and 2018.
It wasn’t just the sale of the GNB Vida insurance company that was on Deloitte’s radar. “Public” says in today’s edition that Deloitte’s special audit dedicated part of the report to analyzing the sale, in October 2019, of GNB Vida (now Gama Life) to funds managed by Apax, whose final price was 123 million euros, resulting in a loss for Novo Banco of 268.2 million.
The Deloitte audit does not identify the names of the managers, knows Jornal Economico, but only “acts of management, respective dates and losses generated.”
In a statement sent this morning, the Ministry of Finance says that the audit “focuses on a very long period of the activity of Banco Espírito Santo until 2014”, a period for which “a criminal process is in progress.” For this reason, and also due to “the need to safeguard the economic interests of the State”, the audit will be sent by the Government to the Attorney General’s Office.
The analysis shows that Novo Banco’s losses were “fundamentally” due to exposure to assets “that originated in the period of activity of Banco Espírito Santo” and that were transferred to Novo Banco’s balance sheet after the resolution of BES.
Regarding the analysis period of Novo Banco, between August 4, 2014 and December 31, 2018, Deloitte concluded that this credit institution incurred net losses of 4,042 million euros in 283 operations.
Three blocks of management acts of Novo Banco practiced in that period were analyzed. 201 credit operations were audited that generated losses of 2,320 million euros, 26 operations with subsidiaries and associates that caused losses of 488 million euros and 56 operations with other assets that generated losses of 1,234 million euros.
The audit work analyzed the management acts carried out between January 1, 2000 (cut-off date established for the purposes of the retrospective analysis of management acts) and December 31, 2018, in relation to the 283 operations that are part of the audit object, thus covering both the period of activity of Banco Espírito Santo and the period of activity of Novo Banco.
In addition to the sale of Tranquilidade, there are more transactions, in this analysis, that took place before the sale of Novo Banco to Lone Star, in October 2017, and before the creation of the contingent capitalization mechanism of the Resolution Fund. One of them is the sale in 2016 of two Tivoli hotels in Brazil and 12 hotels of the same group in Portugal, including Tivoli Avenida, which were sold to the Minor group for 194 million euros.
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