With this agreement, Novo Banco will divest its retail, private banking and SME operations in Spain, including all 10 branches and employees.
Abanca bought Novo Banco’s branch business in Spain. With this sale, which is part of the bank’s strategic plan, the bank led by António Ramalho hopes to improve the efficiency ratio, as well as return on equity.
Without revealing the value of the operation, Novo Banco said it would have a marginal impact on this year’s net profit, but would make it possible to strengthen the capital position with an expected circa 55 bps increase in Common Equity Tier 1 ratio (expected); and have a positive impact in liquidity ratios (Liquidity Coverage Ratio and Net Stable Funding Ratio).
“Novo Banco signed an agreement with Abanca Corporación Bancaria, S.A. for the sale of its Spanish branch business. With this agreement, Novo Banco divests its retail, private banking and SME operations in Spain, including all 10 branches and employees,” according to a statement sent to CMVM this Monday.
The bank led by António Ramalho said in the statement that it “has explored various strategic options with respect to its operations in Spain and decided to launch a sale process in May 2020.” The activities in Spain were reclassified as discontinued operations in Novo Banco’s balance sheet as of September 30. “The agreement represents the most suitable exit option for the bank, while ensuring the maintenance of client service and offering attractive long-term prospects for both clients and employees in Spain,” said the statement issued by Novo Banco.
This sale, which should only be completed in the second half of 2021, is part of the bank’s strategic plan, which involves the sale of non-core assets and operations. The aim is to reduce the complexity of the bank’s structure, as well as costs, “executed in order to comply with the commitments defined for 2021.”
At last, Novo Banco says this transaction with Abanca will allow the bank “to pursue its strategy to redeploy resources to its core banking business in Portugal.”