China’s Anbang Insurance Group with highest proposal to buy Portugal’s Novo Banco

4 August 2015

The most interesting financial proposal for the purchase of Portugal’s Novo Banco is the one from the Chinese insurance group Anbang, offering 3.2 billion euros in currency and a further million euros to recapitalise the institution, asserts the Portuguese daily Público, citing Portuguese media.

The newspaper specifies that the three candidates to buy Novo Banco submitted bids well below the 4.9 billion applied in the institution, which led the Bank of Portugal to request improved proposals and extend the deadline to close the matter.

Since the collapse of Banco Espírito Santo, culminating in the announcement of state intervention on 3 August 2014, Novo Banco has remained under the authority of the Bank of Portugal, whose head stated that the bank would shift to the private sphere “by the end of July 2015.”

Doubts surrounding the new institution, namely legal cases that should last for years, most likely contributed to the Bank of Portugal’s decision in the last tender phase (late July) to send back the binding offers from the three candidates.

The Chinese of Anbang (with no activity in Portugal) and Fosun (which bought Fidelidade from the state and Saúde Luz from Novo Banco) and the US investment fund Apollo (which acquired Tranquilidade from Novo Banco) expressed firm acquisition intentions far from the 4.9 billion that would permit the central bank and the government to consider the operation a success.

The state lent the Resolution Fund anchored in the financial sector 4.4 billion from the state line negotiated with the troika for financial support to Portugal; the Fund, managed by the Bank of Portugal, placed the remaining 500 million in Novo Banco.

Any proposal below 4.9 billion would thus imply a loss to be supported by the whole system, which would affect the state financial group Caixa Geral de Depósitos, with 30 percent of the market, and hence taxpayers.

Additionally, by having to absorb “damages” the banks’ results decline; that would also be reflected in less revenue for the state. (Macauhub/CN/PT)