Forget Minsheng. Lone Star’s offer for Novo Banco may be the only solution
Minsheng was once the favorite for the purchase of Novo Banco, but they have been overtaken by Lone Star. Is the North-American fund a good solution for the Portuguese bank?
The China Minsheng Financial was the main contender on the running for the acquisition of Novo Banco, but even though they were granted extra time to do so, it is almost certain they will not present the ‘proof of sufficient funds’ needed to execute their offer.
Therefore, the North-American fund Lone Star is now the front runner: their offer includes acquiring Novo Banco to the Resolution Fund for 350 million euros, as well as increasing the bank’s capital (the increase will happen in two operations of 750 million euros each, the Portuguese newspaper Jornal de Negócios disclosed, still to be confirmed). Additionally, Lone Star has a very specific interest: the ‘side bank’, which includes real estate and other non-core assets from Novo Banco, valued at eight billion euros.
A capital increase allows income from NB’s future dividends to be redirected to the Resolution Fund – meaning the Fund will have immediate revenue from Lone Star’s offer. The problem is their offer requires the Resolution Fund’s guarantee for the ‘side bank’ and a counter guarantee from the Portuguese state. The latter – called Asset Protection Scheme – transfers the risk to Portuguese taxpayers. This public guarantee may have repercussions not only for taxpayers, but for Portugal’s deficit.
The proposal presented by the Lone Star Fund is the last chance Novo Banco has to be acquired.
