Novobanco eyes EuroBic again

 In Banks, Mergers and Acquisitions, News

Novobanco is back in the race to buy EuroBic according to the daily business online news source ECO.

Although the bank had already shown an interest in buying EuroBic around two years ago, Novobanco was not allowed to make acquisitions of any other financial institutions because it was undergoing a restructuring plan imposed by Brussels.
Now, however, the bank has completed that restructuring plan with plans to float on the stock market next year or in early 2025.
And plans for the Spanish bank Abanca to buy EuroBic have fallen through after negotiations between EuroBic shareholders and Abanca broke down leaving the path open for Novobanco to make a bid.
Novobanco CEO Mark Bourke has mooted the idea of growing the bank by buying other businesses but is prohibited from paying dividends until the end of 2025 under the terms of a contingent capital agreement.
Under the terms of the contingent capital mechanism, the Resolution Fund, as a 25% shareholder, has made capital injections since 2017 to provide the bank with cash flow and depending on the performance of specific portfolios of assets. The rest of the bank is owed by the US equity and asset management fund Lone Star.
On the other hand, a capital stash it has saved over the past two years on the back of high interest rates could help finance its inorganic expansion strategy.
Since the Luanda Leaks scandal broke in early 2020, which involved one of EuroBic’s main shareholders Isabel dos Santos who holds 42.5% of the bank, EuroBic had found itself in a dead end because the Angolan tycoon is sill on the run from Angolan justice for fraud, money laundering and alleged embezzlement of funds from Angola’s State oil company Sonangol.
EuroBic, which is led by José Azevedo, doubled its profits in 2022 to €40 million. In the first quarter of this year it made €23.8 million in profits, six times more than in the same period in 2022 and is on track for the best results ever by the end of the year.