On Wednesday, October 29, a signing ceremony took place in Lisbon, marking the State of Portugal and the Resolution Fund’s adherence to the contract for the sale of Novo Banco. What exactly does this process involve? This article explains the main aspects of the deal.
1 – Who is the buyer?
The Ministry of Finance and the Resolution Fund announced they had signed an agreement with Grupo BPCE (Banque Populaire et Caisse d’Epargne) and Nani Holdings, the majority shareholder of Novo Banco (an entity owned by Lone Star Funds), to sell the minority stakes held in the institution (specifically 11.5% by the State of Portugal and 13.5% by the Resolution Fund).
The agreement follows the Memorandum of Understanding dated June 13, concerning the acquisition by BPCE of 75% of Novo Banco’s share capital from Lone Star Funds.
Upon completion of this process, “French group BPCE will become the sole shareholder of the fourth-largest Portuguese bank“.
2 – Will Novo Banco remain a “Portuguese bank”?
At the ceremony, BPCE’s CEO Nicolas Namias expressed confidence in Novo Banco, which will have a future “dedicated to financing the Portuguese economy,” remaining a “Portuguese bank”.
The BPCE CEO stated his “confidence in the Portuguese economy, Novo Banco, and the quality of the relationship between BPCE and the Portuguese environment and government”.
“We should always focus on the future,” he stated, indicating a “new future for the bank” where there will be a commitment to “ensuring that we are all dedicated to financing the Portuguese economy”. “It’s our DNA,” he reiterated.
Nicolas Namias noted that Novo Banco remains a Portuguese bank, highlighting its “proximity with customers, territories, and the Portuguese market”. “Portugal is becoming the second-largest market for BPCE, it’s a long-term commitment, and I want everyone to see BPCE as the bank for Franco-Portuguese relations,” he asserted.
3 – How does the Finance Minister view this operation?
Joaquim Miranda Sarmento, the Minister of State and Finance, asserted that the sale of Novo Banco strengthens the diversification of the national banking system and avoids “excessive concentrations”.
“This operation strengthens the diversification of the national banking system, avoiding excessive concentrations and ensuring the balance and competitiveness of the Portuguese financial market,” said Joaquim Miranda Sarmento at the ceremony.
The minister was the final speaker in what he called “a moment of special significance“: Besides “representing the culmination of a long process that began over 10 years ago with the resolution of Banco Espírito Santo,” the chosen location, the Noble Hall of the Ministry of Finance, is “a place where the History of our country has been written for centuries and is, in itself, a symbol of reconstruction and national resilience”.
4 – What about the President of the Resolution Fund?
Luís Máximo dos Santos, President of the Resolution Fund, indicated that the sale of Novo Banco to BPCE is the “culmination of a very complex, at times painful process, that tested all those who dealt with it“.
“The sale of the Resolution Fund’s and the State’s stakes is the culmination of a very complex, at times painful process, that tested all those who, one way or another, had to deal with it and will remain in the history of the Portuguese financial system”, he reiterated at the signing ceremony of the State of Portugal and the Resolution Fund’s adherence to the contract for the sale of Novo Banco, in Lisbon.
For him, this sale is “much more than a financial transaction,” being “the best demonstration of the progress achieved by the Portuguese banking system in recent years”.
Additionally, it demonstrates “that Novo Banco successfully completed its restructuring process, a result that, it is worth noting, many did not believe possible a few years ago”.
Máximo dos Santos also noted that this sale will allow the Resolution Fund to “recover a portion of the funds used in financing the resolution of Banco Espírito Santo, thereby enhancing the fund’s ability to repay debt”.
5 – How much does Portugal recover from this sale?
The Ministry of Finance explained in a statement that “this operation also enables a significant recovery of public funds used in the restructuring of Novo Banco“.
It further explained: “The sale of the State’s and the Resolution Fund’s stakes in Novo Banco, along with the dividend distribution that occurred this year, allows the public sector to recover almost two billion euros of the funds injected into the institution”.
