According to the Portuguese press, Apollo/Centerbridge, Lone Star, Banco Português de Investimento (BPI) and Banco Comercial Português (BCP) are the our bidders that have submitted very different proposals for the acquisition of Novo Banco — the bridge bank created in August 2014 to carry forward the healthy assets from collapsed Portuguese lender Banco Espirito Santo (BES).
Portuguese newspaper Diário de Notícias said that at least one potential buyer expressed interest in all of the bank, but some bids cover only a portion of the assets on its balance sheet.
If Novo Banco is not sold to one of the four bidders, the Bank of Portugal will look to place its shares with institutional investors via direct negotiations rather than through capital markets.
The complexity of the four proposals received has reportedly delayed Novo Banco’s sale process. A decision from the Portuguese central bank was originally scheduled for July, but was then pushed back to August and, according to Diário de Notícias, is now expected in September.
“Coincidentally, September is when a final decision on the future of BPI, one of the parties interested in Novo Banco, could be made,” said analysts at BNP Paribas.
BPI postponed a decision on lifting its 20% limit on voting rights last week, delaying any potential takeover by Caixabank. Removing the voting rights limit is a key condition of Caixabank’s bid for BPI and a decision is now likely to be reached in September, when a decision on the sale of Novo Banco may also be reached.
There is increasing pressure for the Bank of Portugal to resolve the sale of Novo Banco quickly.
An agreement between European authorities and the Portuguese government means Novo Banco must be sold by August 2017, or else it will enter “a process of orderly winding down”.
The closer the sale agreement is to that date, the greater bargaining power bidders will have to command a price lower than the Novo Banco’s €4.9bn valuation.
Sacrosanct senior
“The possibility of an orderly wind-down process beginning in just over a year makes ultimate recovery values very unpredictable for bonds with maturities beyond August 2017.”
Late last year Novo Banco senior bondholders came into focus when the Bank of Portugal announced it would retransfer five of the lender’s 52 senior bonds to the old BES, in an extraordinary move that called into question the hitherto sacrosanct principle that holders of the same asset class retain equal standing within the resolution hierarchy.
A tender offer for eight of Novo Banco’s remaining senior bonds last month gave investors the opportunity to exchange securities for cash, but the offer had a surprisingly low take-up.
Senior bondholders remain at risk following last year’s controversial bail-in, because the Portuguese lender is still subject to resolution tools and it remains a possibility the bank will be wound down if it cannot find a suitable buyer, or buyers, within the next 12 months.