The investigation focuses on the alleged abuse of the ‘haircut’ financial mechanism, used to sell assets below market value, which caused excessive losses during the terms of office of António Ramalho and Mark Bourke, a period in which the bank received 3.5 billion euros from the State.
The Judicial Police in Lisbon, in an investigation that investigates suspicions of active and passive corruption.
In a statement, the PJ says that the operation, entitled ‘Haircut’, aims to execute “dozens of search and seizure warrants and computer research, in which facts are investigated that could substantiate the practice of crimes of passive and active corruption in the private sector, qualified fraud and money laundering”.
Why ‘haircut’?
It is no coincidence that the operation is called haircut. Let’s understand what is at stake in this investigation.
Haircut, which in English means “haircut”, is an expression used in financial circles to designate a legal mechanism that allows banks to sell difficult-to-recover loans, land and properties below market value.
This is a legal expedient that Novo Banco used, and which, it seems, has abused, since it was acquired by the Lone Star fund, in 2017. This practice will have caused losses greater than would be reasonable.
The illicit practices in question allegedly occurred during the mandates of António Ramalho and Mark Bourke, at a time when the bank received successive financial injections from the Portuguese State, totaling 3.5 billion euros over eight years.
