Sale of Portugal’s Novo Banco expected to be completed this year

6 December 2016

The sale of Portugal’s Novo Banco, the bank that inherited the healthy assets of the bankrupt Banco Espírito Santo, should be completed by the end of the year, with the Bank of Portugal announcing which of two candidates has been selected, according to the Portuguese press.

The two applicants to buy the bank are US investment fund Lone Star Funds and the China Minsheng Financial Group, which according to daily newspaper Público has put forward a more interesting proposal.

Lone Star Funds intends to keep 100% of Novo Banco but wants to choose assets and requires protection against risks that may arise later that may somehow have an impact on the accounts.

The Chinese investor plans to take on 100% of the bank through a capital increase that will increase shares by 50% and has floating the remaining percentage on the stock exchange within two years as a condition.

Both proposals meet the central requirement of the resolution fund for the sale: the removal of bridge bank status.

For this to happen, the resolution fund, a structure created in 2012 resulting from contributions from banks and financial institutions in Portugal and a special levy imposed on the financial sector, must ensure that it no longer owns a majority of capital or has management influence.

According to current legislation, Novo Banco must be transferred into private hands by August 2017. (macauhub)