Clouds thicken around Novo Banco bail-in

Novo Banco Flickr 230x150
By Tyler Davies
07 Jan 2016

The Bank of Portugal ripped up the resolution rule book for its controversial bail-in of five Novo Banco senior bonds last week, throwing uncertainty on future resolutions and leaving investors to reassess their relationship with Portuguese bank debt, Tyler Davies reports.

Novo Banco was created in August 2014 to carry forward the healthy assets from collapsed Portuguese lender Banco Espirito Santo (BES). But the new bank failed the European Central Bank’s stress tests in November and was asked to draw up plans to address a €1.4bn capital shortfall.

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