Novo Banco, the Portuguese bank lead by former AIB chief financial officer Mark Bourke, has attracted two bids from French banking group BPCE and CaixaBank of Spain, according to people familiar with the matter.
Lone Star, the US private equity giant which owns Novo Banco, could sell the lender outright but is also evaluating whether to offload shares through an initial public offering, said the people, who asked not to be identified as the discussions are private. A preliminary decision on a winning bidder or the IPO route could be made as early as this week, the people said.
Representatives for BPCE, CaixaBank and Lone Star declined to comment.
Mr Bourke was CFO of AIB from 2014 to 2019, helping lead the bank through its IPO in 2017. He moved to Novo Banco as CFO before taking the top job in 2022.
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US private equity firm Lone Star owns a 75% stake in Novo Banco, while Portugal’s government holds 25% through entities including the country’s Resolution Fund. JB Capital said in a research report in March that it estimated Novo Banco could be valued at between €5.5 billion and €7 billion.
An acquisition of Novo Banco by BPCE, whose units include Banque Populaire and Natixis, or CaixaBank would be an important mark for cross-border banking deals in Europe.
Governments in the region have recently hampered potential deals – Spain has been opposing the planned takeover of Banco Sabadell by BBVA, Italy is seeking to obstruct the purchase of Banco BPM by UniCredit, and Germany has said it’s against a potential acquisition of Commerzbank by UniCredit.
Portuguese finance minister Joaquim Miranda Sarmento said in May that Spanish banks shouldn’t further increase their presence in the country. Spanish lenders now already represent about a third of Portugal’s banking market, he said in a television interview. “I think that value shouldn’t increase, due to a matter of concentration and of dependency,” he said.
CaixaBank shares slipped 0.4% in Madrid on Monday. The Spanish lender already owns Banco BPI, Portugal’s fifth-largest bank.
Novo Banco is Portugal’s fourth-biggest lender. It posted its first profit in 2021 and its net interest income climbed as central banks raised interest rates. Novo Banco previously had to shed assets and sell soured debt to reduce its non-performing loan ratio, which was one of the highest in Europe after the bank emerged from the break-up of Banco Espirito Santo SA a decade ago.
Novo Banco has about €17 billion in corporate loans, €10 billion in mortgage loans and €2 billion in personal loans, according to a May 6 presentation. It has 1.7 million clients.
The Portuguese bank has repeatedly said it’s preparing for an IPO. If Lone Star picks that option, Novo Banco may be Portugal’s first major IPO in four years and the biggest since the listing of EDP Renovaveis in 2008. Finance Minister Sarmento said in January that Lone Star planned to sell a stake of about 25% to 30% of Novo Banco in an IPO.
Novo Banco’s IPO could raise €1 billion or more depending on investor demand. The lender picked Bank of America, Deutsche Bank and JPMorgan Chase as global coordinators for the first-time share sale. Lone Star also lined up Deutsche Bank to guide discussions with potential buyers of Novo Banco.
Mr Bourke said in an interview on May 6 that Novo Banco was “well advanced” in drafting a prospectus for a possible IPO, which it aimed to carry out in June at the earliest.
Banco Espirito Santo, once Portugal’s biggest lender by market value, got a roughly €5 billion rescue in 2014 after regulators ordered it to raise more capital following the disclosure of potential losses on loans linked to companies in the family-controlled Espirito Santo Group. The Portuguese central bank moved the lender’s deposits and most of its assets to Novo Banco. Lone Star then agreed to inject €1 billion in Novo Banco when it bought its stake in the bank in 2017. – Bloomberg
