Santander rules out Novobanco purchase

The Spanish banking group Santander has shown interest in the possibility of growing through acquisitions in the Portuguese market.

However, according to Alantra Partners, the bank does not have sufficient capital to buy Novobanco even if the deal would make perfect sense from a strategic point of view.

Instead, the private equity group reckons that Millennium bcp is the front-runner to acquire the bank created in 2014 from the ruins of Banco Espírito Santo.

A the conference ‘Banking of the Future’ organised by the business daily Negócios, the CEO of Santander Portugal recognised that in mature markets like the Portuguese one it was “difficult to organically grow”, therefore acquisitions were a question of opportunity and price.”

The analyst from Alantra, Francisco Riquel had written in a document that from a strategic point of view it made sense for Santander to purchase Novobanco in order to reinforce its position in the Portuguese market.

But with Santander out of the running because of the capital cost, and Spain’s CaixaBank having already indicated that it would not make a bid for Novobanco, that only leaves BCP.

In the same report from Alantra, it suggests that one of the most probable paths that Novobanco could take is an IPO (Initial Public Offer).

The CEO of BCP, Miguel Maya, who was also at the conference, said that the bank looked at all opportunities at any given moment provided they created value, but said that now his bank’s priority is to pay dividends out to shareholders.

Novobanco has in recent years become one of the most profitable and sound banks in the Portuguese banking system but is unable to distribute dividends to shareholders.

At the end of September it had a Return on Tangible Equity of 18.9% and in the first nine months of the year posted profits €610.4 million, 4.4% below the like-for-like period in 2023.

This fall was largely because the bank had set aside €30 million for its strategic innovation and streamlining plan.

The CEO of Novobanco, Mark Bourke said a few weeks ago that the bank had €1.3Bn to distribute in dividends but it would have to terminate the Contingent Capital Agreement and get authorisation from the regulator to pay them out to the main shareholder Lone Star, the Resolution Fund, and the State through the Treasury.