How much will (or would) Minsheng pay for Novo Banco?

The main contender for the purchase of Novo Banco, the China Minsheng Financial, has not yet presented the ‘proof of sufficient funds’ needed to execute their offer. At stake is an investment of 750 million euros, through a capital increase, to hold 55% of the bank currently headed by António Ramalho – it does not involve acquiring shares, contrary to the proposals made by the other contenders (the Americans Apollo/Centerbridge and Lone Star).

According to information disclosed to ECO, China Minsheng should have handed in a letter in which the board, in Hong Kong, formally assumed they would not perform the operation in the terms previously agreed on. Negotiations continue, but the issue goes beyond bureaucracy. China Minsheng is said to only have 150 million euros available, and it is based on this condition that a new agreement will be made.

ECO is aware that by the end of last week, following difficult discussions, China Minsheng was granted an extra week to present the said proofs, meaning the deadline ends this Friday. China Minsheng should be, by now, trying to find other international means of financing, including in China, to assure they have the funds for the operation – although those who are familiar with the case told ECO such solution will be difficult to execute.

Officially, no one is making any statements, but officiously several sources continue to assure the operation is not jeopardized, in spite of this unexpected setback. They recall the deadline for handing in the ‘proof of funds’ could be postponed to January and that there are other contenders in the running. This means the possibility of postponing the sale of Novo Banco to January is increasing.