Novo Banco sells largest NPL portfolio in the Portuguese banking history. Bain, Cerberus and KKR are interested

  • ECO News
  • 21 March 2019

Novo Banco has moved on with the sale of its NPL portfolio, entitled "Projeto Nata 2", which is valued at €3.3bn. The project has attracted several investors in the first phase, and it will be

The bank is under strong criticism, and there is a lot of doubt surrounding the sale of these problematic assets inherited by the former BES bank. Nonetheless, “Projeto Nata 2”, planned by Novo Banco to dispose of those assets, is now underway. The largest NPL portfolio ever sold in the country has now been placed in the national market, and it has been evaluated at €3.3bn, attracting several investors, such as Bain funds, Cerberus and KKR, a source in the Portuguese market told ECO.

The sale operation is being led by Alantra, a Spanish investment society, to which Rita Barosa is associated as a partner, having previously served as an advisor to the banking institution led by António Ramalho in similar transactions. The bank is aso counting on the support of the consulting company KPMG.

What is at stake? A portfolio of 1,000 credits conceded to companies which have been in default, and that had been given by the bank in the BES period. About 30% of these contracts were associated with a guarantee (secured), while the rest had no guarantee (unsecured).

Novo Banco is under immense pressure to ease its NPL portfolio, in line with the strategy other Portuguese banks have applied. Portuguese banks are among those in Europe that present the highest volume of toxic assets in their accounts.

ECO Insider (a weekly newsletter which is reserved to subscribers) had already announced that Projeto Nata 2 was about to be launched, around 2 weeks ago, in an operation that António Ramalho expects will reduce the bank’s Non-Performing Exposure (NPE) ratio to 12% by the end of the year.

“Nata 2” process is still in the very early stage. Novo Banco is expecting to seal the deal by the end of the third quarter of the year, the same source told ECO. In this stage, the bank is welcoming non-binding offers from investors, until the end of the month. Those interested will have access to a file with more or less detailed information on the NPL portfolio (this file is known as a data tape), and should afterwards present their non-binding offer to the bank.

The candidates interested in investing in the NPL portfolio of the bank (Bain Capital, Cerberus and KKR) have all previously invested in other similar processes in the Portuguese market, according to ECO’s sources.

The bank will start with exclusive negotiations in the next few months, and it will shortlist candidates.

These will have to present a strong acquisition offer by June, at the very latest. The contract is expected to be signed anywhere between July and August. ECO’s reporter contacted Novo Banco, but the bank did not answer any of the questions.

75% of Novo Banco’s shares are owned by Lone Star and the remainder 25% belong to the Portuguese state, via the Resolution Fund, and the bank has been under political scrutiny lately after the CEO of the bank, António Ramalho, announced that the bank would have to ask for financial aid from the resolution fund ( around €1.145 bn, to compensate for losses caused by assets that are protected by the contingent capital mechanism, created when Lone Star acquired the Portuguese bank).