Novo Banco, the Portuguese bank created out of failed lender
Banco Espírito Santo SA in August, has received at least four
expressions of interest from potential buyers before a Dec. 31
deadline, a person familiar with the matter said Monday.
Novo Banco, under Chief Executive Eduardo Stock da Cunha, is
seeking to finalize a sale by the middle of 2015. Interested
parties include Portugal's Banco BPI SA, Spain's Banco Santander
SA, China's Fosun International Ltd. and U.S. private-equity firm
Apollo Global Management LLC, according to a person close to the
sale process.
Santander and BPI this month confirmed that they would submit
expressions of interest, while Fosun had previously said it would
consider purchasing the bank. No one was immediately available at
Apollo to comment.
While Novo Banco wants to fully pay back the EUR4.9 billion
($6.01 billion) capital injection it received from a bailout fund,
analysts consider it unlikely the bank will fetch that much.
A teaser document prepared by BNP Paribas this month said the
sale represents "a unique opportunity to acquire the control of a
leading financial institution in Portugal with international
operations." Novo Banco, with EUR72.5 billion in assets, has around
an 18% share of Portugal's banking market, according to the bank,
and a presence in nearly two dozen countries globally.
Novo Banco started life on Aug. 3 when the Bank of Portugal used
a Portuguese resolution fund to inject EUR4.9 billion and save the
best parts of Banco Espírito Santo. Novo Banco kept the bulk of
BES's branches, deposits and loans, while shedding shareholders'
and junior bondholders' claims on the bank and its problematic
subsidiaries in the U.S., Libya and Angola.
Junior bondholders are now trying to contest the bank split in
Portuguese and European Union courts, but the sale of Novo Banco is
moving ahead. A EUR379 million purchase of Novo Banco's investment
bank, Banco Espírito Santo de Investimento SA was agreed by China's
Haitong Securities earlier this month.
Banco Espírito Santo collapsed in August amid a record
first-half loss triggered by its exposure to its troubled
family-controlled parent company. The company, Espirito Santo
International SA, filed for bankruptcy in July after an audit
ordered by the Bank of Portugal found irregularities in its
accounts. Banco Espírito Santo didn't only provide loans to
Espirito Santo International and its units, but also sold their
debt to customers of the bank. Some of that debt was sold to
clients through a complex funding scheme that the Bank of Portugal
has called fraudulent. The Bank of Portugal and the Portuguese
prosecutor's office are currently conducting separate
investigations into the matter.
In addition to the core Portuguese business, the future owner of
Novo Banco will take over a set of European units and global
operations in countries including Cape Verde, the Cayman Islands,
Venezuela and Mozambique. It will also get 9.9% of Angolan lender
Banco Economico. However, a New York branch with around $443
million in assets is in the process of being closed, according to
the BNP Paribas presentation.
Novo Banco's main attraction, however, continues to be its
domestic businesses. The bank has reported deposits of EUR25
billion in August, and since then the figure has risen EUR2 billion
following some successful marketing campaigns. Banks with
operations in Portugal, including BPI and Santander, would see
their client base widen sharply. They would also inherit a credit
portfolio of close to EUR44 billion, of which loans to companies
comprise 72%.
While Portugal has been hit hard by the sovereign debt crisis
that forced it into a bailout in 2011, its economy is recovering.
Nonetheless, the jobless rate remains above 13%, bringing potential
credit risks. Novo Banco reported credit at risk of default at
close to 14% from the total portfolio.
Meanwhile, the "bad bank" that kept the Banco Espírito Santo
name is separately in the process of selling Espirito Santo Bank in
Miami, a small business and mortgage lender which also holds the
group's U.S. securities license. Other parts of the Espirito Santo
group are also being sold, as many parts of the businesses make
their way through court-managed liquidations.
Write to Patricia Kowsmann at patricia.kowsmann@wsj.com and
Margot Patrick at margot.patrick@wsj.com
Access Investor Kit for Haitong Securities Co., Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CNE000000CK1
Access Investor Kit for Banco Santander SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=ES0113900J37
Access Investor Kit for Fosun International Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=HK0656038673
Access Investor Kit for Banco Espírito Santo SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=PTBES0AM0007
Access Investor Kit for Banco BPI SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=PTBPI0AM0004
Access Investor Kit for Banco Santander SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US05964H1059
Subscribe to WSJ: http://online.wsj.com?mod=djnwires