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Portugal's Novo Banco never sold assets to Lone Star, says CEO

LISBON, Sept 2 (Reuters) - Portugal’s Novo Banco, which emerged from the ruins of the collapsed Banco Espirito Santo (BES), denied on Wednesday it sold assets to its main shareholder, U.S. private equity fund Lone Star, after some politicians suggested it had.

The bank, which is 75% owned by Lone Star since October 2017 and 25% by the state-backed Portuguese Resolution Fund, has recently been embroiled in a controversy over the sale of non-performing assets.

Lawmakers from at least three political parties have said Novo Banco could be benefiting its main shareholder Lone Star but the bank’s chief executive Antonio Ramalho said that was not the case.

“Novo Banco has never made any sale of (non-productive) assets to Lone Star,” Ramalho told a news conference. “What is going on are just false controversies.”

Under the terms of the sales contract, Novo Banco is not allowed to sell assets to Lone Star or entities related to it.

In a statement, Lone Star said it and its affiliates have never been part of any type of transaction with related parties for the acquisition of assets, including real estate assets, from the Novo Banco group.

Ramalho’s comments came a day after an audit on Novo Banco’s balance sheet, which was requested by parliament and carried out by Deloitte, revealed 4 billion euros in losses between 2014 and 2018.

The government has sent the audit to be examined by prosecutors.

Ramalho said more than 95% of the losses identified by the audit resulted from assets which originated before BES collapsed in 2014.

“After the resolution and the sale (to Lone Star) there were no major problems found by the audit,” Ramalho said.

The leader of the largest opposition party PSD, Rui Rio, said on Tuesday that it is important to know “what happened to all these losses”.

In the first half of 2020, Novo Banco’s consolidated loss worsened nearly 39% year-on-year to around 555 million euros, mainly due to pricey provisions to tackle the coronavirus pandemic and toxic assets inherited from BES. (Reporting by Sérgio Gonçalves, Editing by Catarina Demony and Carmel Crimmins)

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