Novobanco reduces capital and distributes €1.1Bn for shareholders

Novobanco is to reduce its capital by €1.1Bn and will pay it out as dividends to its shareholders that will receive €2.2 per share with the main shareholder Lone Star (75%) netting €825 million.

The decision was made at Novobanco’s General Assembly meeting on Monday (May 5).

The Resolution Find, which had been set up to capitalise the bank since 2014, will net €148.9 million while the General-Directorate of the Treasury and Finances (DGTF) will bag €126 million.

In a communiqué sent to the market, Novobanco says that the operation will “free up excess capital” that had accumulated in recent years and had been set aside to pay out dividends to shareholders.

“The number of shares will remain unchanged.The amount corresponds to a reduction that will be distributed among shareholders at 32.20 per share”, adds the bank led by Mark Bourke.

Novobanco had already announced a dividend of €224.6 based on last year’s results. In other words, within just two months shareholders will receive a total of €1.325Bn from the bank, enabling the US fund Lone Star which owns 75% of the bank, to recover the €1Bn it had invested in Novobanco in 2017.

On the other hand, this reduction in capital had been factored in as part of the process for the sale of Novobanco which will either be sold or floated on the stock market perhaps later this year and certainly in 2026, if not.