Novobanco CEO optimistic on agreement with Resolution Fund

The CEO of Novobanco, Mark Bourke, says he is optimistic that the bank will be able to soon reach an agreement with the Resolution Fund on the contingent capital mechanism.

The fund has provided the bank with millions of euros since 2014 when it was set up too proud it with enough liquidity to operate during a long period of restructuring which will lead to its sale or an IPO in the near future.

The Resolution Fund has injected over €100 million into the bank which emerged from the collapse of Banco Espirito Santo in 2014 and has already received billions in State funds.

Novobanco, now 75% owned by U.S. private equity firm Lone Star, has been cleaning up its balance sheet since 2014 to remove bad assets inherited from BES.

Novobanco posted profits of €610 million in the first nine months of 2024, down 4.4% on the like-for-like period. Nevertheless, the bank exceeds to exceed its target of €700 million in annual profit according to Mark Bourke who presented the bank’s results to analysts at the close of October.

“The bank will continue to deliver both in terms of implementing its strategy and delivering sold financial results”, said the banker, adding that the bank was continuing to generate capital in a consistent way, with an increase of 255 base points since the start of the year.

The result achieved was impacted by the constitution of a provision of €30 million in the second quarter for the bank’s transformation process. Excluding this extraordinary effect, profit would have grown 0.3% year-on-year.

One of the most relevant points of the presentation was the optimism shown by Bourke regarding the possible early end of the contingent capital agreement (CCA): “We remain very optimistic about the possibility of reaching a conclusion in the short term with the [Resolution] Fund and the shareholder (Lone Star). But I can’t ‘add more colour’ than that,” Bourke said, noting that he expects the process to “happen in the very short term.”