London, Jan. 8, 2025 (Lusa) - Morningstar DBRS considers that the dismissal of Carlos Brandão from Novo Banco's Board of Directors currently has no impact on the respective credit ratings since the suspicious transactions detected are unrelated to the bank's activity.

"The suspicious matter is not related to or associated with the bank or its operations and does not affect customer accounts or transactions, the bank's finances or activity, business operations or risk management system," says the financial rating agency in a commentary released today.

"Consequently - it adds - Morningstar DBRS has no reason to consider, at this stage, that Novo Banco's announcement affects our analysis of the bank's building blocks, nor are there any significant or relevant ESG [corporate governance-related] factors to consider."

According to the DBRS analysis, Novo Banco "acted in full coordination and cooperation with all relevant authorities": "It discovered the suspicious financial transactions, initiated the investigation, informed the regulatory and supervisory authorities of the European Central Bank and the Bank of Portugal and filed a complaint with the Public Prosecutor's Office," it adds.

Even so, the rating agency states that it "will continue to monitor any additional consequences of the incident", namely "if Novo Banco or the supervisory authorities eventually deem it necessary for the bank to make changes to its internal controls".

"We will also be attentive to the prospects of a rapid, permanent replacement for the position of CRO [Chief Risk Officer], given the importance of the risk function," it says, noting that executive director Mark Bourke will take on these functions on an interim basis.

On 25 September 2024, Morningstar DBRS raised Novo Banco's rating to BBB with a stable trend, reflecting "the rapid improvement in performance across several pillars, including the bank's ability to generate results, risk profile and capitalisation".

According to market information, on Tuesday, Novo Banco's Supervisory Board approved the immediate dismissal with just cause of Carlos Brandão from his position as a member of the Board of Directors and Head of Risks following suspicious financial operations.

"This decision was taken following the identification, through the Bank's internal processes, of suspicious financial operations carried out in his personal sphere, which gave rise to a complaint to the authorities," reads the note sent to the Portuguese Securities Market Commission (CMVM).

According to a source linked to the case, Carlos Brandão was accused on suspicion of money laundering and forgery following a note from the Attorney General's Office (PGR).

"As part of the inquiry led by the 4th Section of the Central Department of Investigation and Criminal Action (DCIAP), search procedures are being carried out to identify and seize documents and other evidence of interest to the discovery of the truth," announced the PGR, in a note published on its official website.

At stake, it says, maybe "facts that could constitute the commission of offences of qualified tax fraud, money laundering and forgery by a director of Novo Banco".

In its statement to the market, Novo Banco explained that the operations in question are not related to or involve the institution "in any way" and, therefore, "have no impact on customers, customer accounts or operations, the Bank's financial position or activity, its commercial operations, the risk management system or its employees".

After detecting the situation, the bank carried out an internal investigation and filed a complaint with the Public Prosecutor's Office, which resulted in the opening of an ongoing investigation.

The institution also reported the matter to the banking regulator and the supervisory authority competent in this area.

Carlos Brandão joined Novo Banco as coordinating director of the Risk Department in July 2017 and was appointed as an executive member of the Board of Directors in August 2022.

He was also CEO of Bankinter in Portugal and held positions at Banco Santander and Barclays.

PD/ADB // ADB.

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