LISBON—Portugal's central bank said Tuesday that it ended talks with China's Anbang Insurance Group to sell Novo Banco SA, the Portuguese bank created out of failed lender Banco Espí rito Santo SA last year, and will begin negotiations with another bidder.

The Bank of Portugal didn't say why the talks with Anbang fell through, but the sale process is complex because it involves litigation risk, the likelihood the bank will need to raise capital soon and a price tag, €4.9 billion ($5.5 billion), that is seen as too high by buyers.

The central bank and Anbang had been in exclusive talks since last month, while two other bidders—China's Fosun International Ltd. and U.S. private-equity firm Apollo Global Management—were kept on standby. The central bank didn't say which of these two companies it is now negotiating with. A person familiar with the situation said Apollo's offer was preferred over Fosun's.

Banco Espí rito Santo collapsed in August 2014 amid a record first-half loss triggered by its exposure to its troubled family-controlled parent company. The country's central bank broke up the bank into a "good bank," called Novo Banco SA, and a "bad" one, which kept the toxic exposure to the Espirito Santo empire.

Write to Patricia Kowsmann at patricia.kowsmann@wsj.com

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(END) Dow Jones Newswires

September 01, 2015 07:35 ET (11:35 GMT)