Lisbon, Jan. 8, 2025 (Lusa) - Novo Banco's CEO believes that the former director accused of money laundering has put the bank in a "highly undesirable situation" but that there is no impact on customers and the institution remains focused on its strategy.
Mark Bourke's message is contained in a letter to employees sent on Tuesday afternoon, following the immediate dismissal of Carlos Brandão (director responsible for risk) on suspicion of illegal financial operations.
According to the executive chairman, it was the bank's internal processes that identified "suspicious financial operations in the personal sphere" of Carlos Brandão and, after an internal investigation, complaints were made to the Bank of Portugal and the Public Prosecutor's Office.
Bourke also said that it was in agreement with the regulator and so as not to interfere with the judicial investigation that he decided to "keep the person in question in office and ensure that the matter is strictly confidential".
Novo Banco said that what happened is not related to the institution and has "no impact on customers, customer accounts or operations or on the bank's business, commercial operations, risk management systems or employees".
"Although the bank's business is in no way affected by these events, the fact that a executive official is the subject of an investigation is a very serious matter and is being treated as such," acknowledged Mark Bourke.
The letter also states that Mark Bourke is taking on this role in collaboration with Paul Dobey (former partner at KPMG) for now, pending the appointment of a new risk director.
Mark Bourke ended his letter to employees by saying, "although this is a highly undesirable situation", Novo Banco remains focussed on its strategic objectives and results.
According to information provided to the Portuguese Securities Market Commission, on Tuesday, Novo Banco's Supervisory Board approved the immediate and cause dismissal of Carlos Brandão as a member of the Board of Directors and head of the risk area following suspicious financial operations.
A note from the Attorney General's Office (PGR) said that Carlos Brandão had been charged on suspicion of money laundering and forgery and that another defendant was in the case. A judicial source told Lusa that Carlos Brandão's wife is the second defendant.
Carlos Brandão joined Novo Banco as coordinating director of the Risk Department in July 2017 and was appointed 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.
According to the report and accounts for 2023, the latest available, in that year, Carlos Brandão received a salary of €320,000 from Novo Banco and a further €72,500 in variable remuneration for 2022. The report also states that the variable remuneration for 2023 was €275,000 and that he had €246,000 in deferred remuneration pending (for 2020, 2021, 2022 and 2023).
In addition to the fixed salary, bank directors have bonuses that are paid deferentially and subject to criteria.
Lusa asked Novo Banco whether, with this process, the former director is left with bonuses that he should receive in question (which he may not receive due to what happened) and whether any compensation will be demanded of him.
Today, the rating agency DBRS considered that the dismissal of Carlos Brandão did not currently affect Novo Banco's credit ratings since the suspicious transactions detected are unrelated to the bank's activity. Nevertheless, it said that it would continue to monitor "if Novo Banco or the supervisory authorities deem it necessary for the bank to make changes to its internal controls".
Novo Banco (created in August 2014 to take over part of Banco Espírito Santo's (BES) business when it was resolved) is 75% owned by the US investment fund Lone Star. The bank's Resolution Fund (a public entity) has 13.54%, and the remaining 11.46% belongs directly to the Portuguese State (through the DGTF - Directorate-General for Treasury and Finance).
It is known that the main shareholder is interested in selling part of the bank in the medium term.
Novo Banco made a profit of €610.4 million between January and September, down 4.4% year-on-year.
Last September, it had 4,249 employees and 291 branches.
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