Novobanco sell-off to French “good for banks and consumers”

Movers and shakers in Portugal’s financial sector are said to be satisfied with the sale of Novobanco to France’s BPCE Group, considering it “good for the other banks” since it will reduce the amount that the Resolution Fund will have to pay back to the Portuguese State.

It is also considered in banking circles to be the best solution for consumers because it will bring geographical diversification to the Portuguese market while avoiding Portugal’s banks becoming too concentrated in the hands of the Spanish.

“Dispersing the bank’s capital on the stock market would have been interesting as it would have buoyed the capital markets”, a source involved with the process told the online news outlet ECO.

And added: “But putting that option aside, the sale to the BPCE Group is the best possible solution because it diversifies capital property. We didn’t have French capital in (Portugal’s) commercial banking system.

“It retains competition in the market and independence of decision-making when it comes to financing SMEs”, the source explained.

The source also said that it was the “best solution for Portuguese consumers”, including families and companies. “We will now have a bank with a shareholder that has a different perspective on the market; one that has not been set in Madrid”.

Another source suggested that the banks would also benefit from the deal. The BPCE Group will pay €6.3Bn for 100% of Novobanco’s capital. The Resolution Fund will receive around €867.8 million because it has 13.56% in the bank.

“The banks’ capital injections into the Resolution Fund will be less,” says this source. The Resolution Fund, which is financed by contributions from banks, owes the State €7Bn. Therefore, the proceeds from the sale of it’s stake in Novobanco will help the fund led by Máximo dos Santos to reduce the debt, as he has already announced he will do”.