In a dramatic finale to one of Europe’s most turbulent banking sagas, France’s BPCE Group announced Friday it will acquire a 75% stake in Novo Banco SA from U.S. private equity giant Lone Star Funds, valuing the Portuguese bank at €6.4 billion ($7.4 billion).
The deal, a seismic shift in European banking consolidation, marks the largest cross-border acquisition in the eurozone in more than 10 years, according to BPCE, which operates under the Banque Populaire Caisse d’Epargne (BPCE) banner.
From Rescue to Renaissance: Novo Banco’s Long Road
Novo Banco was carved from the wreckage of Banco Espírito Santo (BES) in 2014 after Portugal’s banking sector collapsed under the weight of the global financial meltdown and the EU sovereign debt crisis. BES, once Portugal’s banking crown jewel, was dismantled following revelations of gross mismanagement and toxic assets.
To salvage the remnants, Portugal’s central bank spun off Novo Banco to harbor the healthy components, while BES was left with the bad debts—and liquidated in 2016. A €4.9 billion bailout from the Portuguese Resolution Fund kept Novo Banco afloat, and in 2017, Lone Star stepped in to purchase a 75% stake, injecting €1 billion in capital and commencing a deep restructuring.
Lone Star noted Friday that under its stewardship, Novo Banco has shed non-performing loans and reduced risk, calling the turnaround “comprehensive.”
