Bank of Portugal chooses Lone Star fund to buy Novo Banco

6 January 2017

The Lone Star investment fund is the best positioned candidate to buy Portuguese bank Novo Banco and will move to the next phase of negotiations, the last stage of the sale process of the bank that inherited the quality assets of the bankrupt Banco Espírito Santo, the Bank of Portugal said.

In this second attempt to sell, investors from the Apollo/Centerbridge consortium have not be completely set aside, but they will only have a chance to buy Novo Banco if negotiations with Lone Star fail.

“Based on the information available today,” said a statement from the Bank of Portugal, “potential investor Lone Star is the entity best placed to finish the negotiating process leading to the acquisition of shares in Novo Banco and we have decided to invite it to in-depth negotiations.”

At the end of the negotiations, the Bank of Portugal will submit a proposal to the government, which can accept it or not, and the finance minister mentioned the possibility of nationalising Novo Banco.

The proposal from Lone Star aims to buy 100% Novo Banco for 750 million euros, followed by an investment of over 750 million in the bank, with the creation of a separate entity for poor quality assets.

China Minsheng Investment was removed from the process because it failed submit required guarantees within the deadline. (macauhub)