Finance Minister against CaixaBank’s purchase of Novobanco. “It would be good if the Spanish presence didn’t increase”

The Minister of Finance, Joaquim Miranda Sarmento, believes that the weight of Spanish banking in the Portuguese market should not increase, signalling that he does not welcome the possible purchase of Novobanco by CaixaBank, owner of BPI.

“Spanish banking today represents roughly a third, perhaps a little more than a third, of the Portuguese banking market. I believe that, for the sake of concentration and dependence, this figure should not rise”, said the Finance Minister on Wednesday evening in the “Grande Entrevista” programme on public television channel RTP3.

When asked about reports that CaixaBank is among the banks exploring a potential takeover of Novobanco, he said that “it’s in the country’s interest that there isn’t excessive concentration in the banking sector by banks from a single country, as is the case in Spain”.

“It would be good for the Portuguese banking market if the Spanish presence, which of course we have nothing against, did not increase”, he said. If the operation goes ahead, around 51.5% of the credit market in Portugal would be controlled by Spanish banks, compared to the current 40%, according to ECO’s calculations based on data from the Portuguese Banking Association (APB) for June 2024.

Emphasising that he didn’t want to “call into question what the market rules are, what Lone Star’s decision will be”, with the solution being a sale or an IPO, he nevertheless stressed that “whenever there is excessive concentration and dependence on a certain segment of the market” there are “problems in the market”.

If Novobanco decides to go public, it could be the largest initial public offering of a European bank in at least ten years, according to the financial rating agency Standard & Poor’s.

Joaquim Miranda Sarmento also stressed that, regarding Caixa Geral de Depósitos’ (CGD) decision, the public bank will have to “analyse the market conditions and whether it makes sense to enter” the race to buy Novobanco. Caixabank may not be alone in the race. ECO reported in April that the French group BPCE, which owns Natixis, is also evaluating a possible takeover.

Miranda Sarmento’s statements come on the same day that the governor of the Bank of Portugal, Mário Centeno, said that whatever the solution is for the sale of Novobanco, it should be “the result of market action”, but emphasised that it is a “highly regulated” market and that there are rules that everyone must respect.

“All the results that come about — and I’m focusing on the Novobanco issue — must be the result of the market’s actions. The market is highly regulated and supervised, for everyone’s benefit. There are rules”, said Mário Centeno during the press conference to present the Board of Directors’ Report.

For the head of the Portuguese banking supervisor, “whatever results from the actions of market agents must respect the rules of that market”, emphasising that there is “great concern on the part of the supervisor about its stability and sustainability so that mistakes like those that have occurred in the past with less appropriate sector dynamics don’t occur”.

Novobanco could be valued at between five and seven billion euros, according to estimates by Spanish investment bank JB Capital.