Portugal said Spanish lenders shouldn’t further increase their presence in the country, the latest sign of a European government wanting to intervene in potential banking deals.
Spanish lenders now represent about a third of Portugal’s banking market, Finance Minister Joaquim Miranda Sarmento said in an interview with television channel RTP3 on Wednesday night. “I think that value shouldn’t increase, due to a matter of concentration and of dependency.”
Novo Banco SA, a Portuguese bank that’s majority-owned by US private equity firm Lone Star, has said it’s preparing for a possible initial public offering. Bloomberg News reported on May 9 that CaixaBank SA of Spain is among suitors exploring a potential acquisition of Novo Banco, according to people familiar with the matter. The bank could also attract interest from French banking group BPCE, the people said.
Portugal’s position is the latest instance in a series of steps European governments are taking to prevent banking deals that they see as negative to the national interest. Spain has been opposing the planned takeover of Banco Sabadell SA by BBVA SA, Italy is seeking to obstruct the purchase of Banco BPM SpA by UniCredit SpA, and Germany has said it’s against a potential acquisition of Commerzbank AG by UniCredit.
Novo Banco, Portugal’s fourth-biggest lender, posted its first profit in 2021 and its net interest income climbed as central banks raised interest rates. It 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 breakup of Banco Espirito Santo SA a decade ago.
“The decision on Novo Banco is up to Lone Star,” Sarmento said. “If Lone Star decides to sell, it will place that sale in the market, and the potential interested parties will make offers.”
Spanish lenders Banco Santander SA and CaixaBank are already among the five biggest banks in Portugal. Santander on Feb. 7 ruled out any interest in buying Novo Banco.
“It seems to me that it’s in the interest of the country that there isn’t an excessive dependency, an excessive concentration in our banking sector in the hands of banks from a single country, as is the case of Spain,” the finance minister said.
Lone Star owns a 75% stake in Novo Banco, while Portugal holds 25% through entities including the country’s Resolution Fund, which is run by the Bank of Portugal. Novo Banco Chief Executive Officer Mark Bourke said in an interview on May 6 that his bank was “well advanced” in drafting a prospectus for a possible IPO, which it aims to carry out in June at the earliest.
Finance Minister Sarmento said in January that Lone Star plans to sell a stake of about 25% to 30% of Novo Banco in an IPO. The minister has also said that the government won’t interfere if state-owned bank Caixa Geral de Depositos SA decides to assess any possible interest in buying Novo Banco.
“What I have always said is that if Caixa analyzes market conditions, and considers that it can make a proposal for Novo Banco on its own or together with another bank, it will have to present that proposal to the shareholder, and the shareholder will make a pronouncement about a concrete proposal,” Sarmento said on Wednesday night.
Caixa Geral de Depositos CEO Paulo Macedo said on Feb. 27 that his bank is analyzing the possible acquisition of Novo Banco.
Banco Comercial Portugues SA CEO Miguel Maya has said his bank —Portugal’s biggest publicly-traded lender— may analyze transactions when it’s asked about Novo Banco, while stating that its plans focus on “organic growth.”
JB Capital said in a research report in March that it estimates Novo Banco could be valued at between €5.5 billion ($6.2 billion) and €7 billion.
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.
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.
