Lone Star enters final talks to acquire Novo Banco
Bank of Portugal to negotiate offer amid continued interest from other bidders
46 minutes ago
by:
Peter Wise in Lisbon
Portugal has selected Lone Star to enter final talks to buy
Novo Banco, the country’s third-largest lender, but has put pressure on the US private equity fund to revise its bid to help protect taxpayers.
Lone Star’s offer for the “good bank” salvaged from the collapse of Banco Espírito Santo has been chosen as the mostly likely to assure the “the stability of the financial system”, the Bank of Portugal said.
But it warned that the fund’s bid also involved a “potential impact” on Portugal’s public accounts that it would seek to “minimise or remove” in further talks.
The potential cost to taxpayers stems from a Lone Star proposal that Portugal provide a state guarantee against risks arising from Novo Banco’s problem assets or litigation against the lender, according to Lisbon bankers.
The central bank’s caution comes amid calls from leftwing allies of the minority Socialist government to nationalise Novo Banco and avert further
potential losses for taxpayers, who have already paid out billions of euros to bail out distressed banks.
“We obviously do not envisage providing a state guarantee that puts at risk taxpayer’s money for a private sector deal,” Mário Centeno, finance minister, told the Diário de Notícias newspaper on Wednesday, adding that “the [Novo Banco] process is not yet over”.
Asked about the possibility of nationalising Novo Banco, Mr Centeno said: “Nothing is out of the question.” The final decision on the sale rests with the government, which has set a deadline of August to complete the deal.
The Bank of Portugal said the next phase of negotiations with Lone Star did not prevent other bidders for Novo Banco, which accounts for about 16 per cent of the country’s banking market, from improving their offers.
Other contenders to acquire the bank include
China Minsheng Financial Holding, private equity groups Apollo Global Management and Centerbridge, and Portuguese lenders Millennium BCP and Banco BPI, according to Lisbon bankers.
China Mensheng had been seen as the leading bidder, according to these bankers, but had been unable to provide guarantees that it could put up the necessary funds. The bankers said the failure may have been the result of Chinese restrictions on exporting capital.
Portugal rescued Novo Banco in a €4.9bn bailout after BES collapsed in 2014. A first attempt to sell the lender failed in September 215 after the Bank of Portugal rejected offers from Apollo and the Chinese groups Fosun and Angbang Insurance as too low.
The second attempt to sell Novo Banco is open to offers for a full “strategic sale” or to include a partial flotation of the lender on the stock market.
Portuguese banks face heavy potential loses from the sale. They financed the bailout through a bank resolution fund, which was expanded for the purpose by a €3.9bn state loan. Lenders are expected to be given up to 30 years to repay any shortfall arising from the deal.
(Financial Times)