The future of Portugal’s Novo Banco is taking a clearer shape as US private equity firm Lone Star signals its intention to pursue an initial public offering (IPO) for a stake of up to 30% in the lender.
This move comes as a departure from earlier speculation about a potential full sale, marking a significant development for the country’s fourth-largest bank.
The Portuguese Finance Minister, Joaquim Miranda Sarmento, confirmed this strategy on Friday, providing insight into the evolving ownership landscape of the institution.
From full sale to IPO: a shift in Lone Star’s strategy
According to a Reuters report, sources familiar with the situation indicated that in September, Lone Star, which currently holds a 75% stake in Novo Banco, was considering both a full sale and an IPO.
These sources suggested that the bank’s valuation could be around 5 billion euros ($5.2 billion).
However, the recent communication from Lone Star to the Portuguese government reveals a narrowed focus on a partial divestment through an IPO.
This change in direction will likely impact the broader Portuguese banking sector landscape.
Novo Banco: a legacy of restructuring
Novo Banco’s history is rooted in the 2014 bailout of Banco Espirito Santo by the Portuguese government, which led to the bank’s creation.
Lone Star acquired its majority stake in 2017, while the remainder of the shares are held by Portugal’s resolution fund and the state.
Government confirms IPO plans
Finance Minister Miranda Sarmento on Friday told reporters that both Novo Banco and Lone Star had communicated their intention to carry out “an IPO of around 25% to 30% of the capital” of the bank.
He clarified that the government had “never been informed that Lone Star is selling its entire 75% stake in the bank”, effectively dispelling rumors of a complete ownership change.
Novo Banco has declined to comment on the matter, and a request for comment has also been sent to Lone Star.
Banking sector consolidation and Novo Banco’s independence
Although the top five Portuguese banks collectively control over 80% of the country’s banking assets, analysts see potential for further consolidation to enhance competitiveness.
However, Novo Banco’s board has expressed a preference for maintaining its status as a standalone lender, reflecting differing views on the ideal structure for the bank’s future.
In June, the CEO of state-owned Caixa Geral de Depositos (CGD), Paulo Macedo, indicated that Portugal’s largest bank was exploring all possible avenues for acquiring another lender to maintain its market position, particularly amid the growing presence of foreign banks, notably those from neighboring Spain.
Addressing this, Miranda Sarmento stated:
If CGD decides to evaluate what the market conditions and what future developments may be, the government will then make decisions based on this evaluation, but we will not interfere in the management of CGD.
The other leading banks in Portugal include Millennium bcp, Santander Portugal (owned by Spain’s Santander), and BPI (owned by Spain’s CaixaBank), further highlighting the competitive nature of the country’s banking sector.
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