Portugal says Novo Banco IPO likely to be for stake of up to 30%

By Sergio Goncalves

LISBON (Reuters) - U.S. private equity firm Lone Star has told the Portuguese government that it is likely to sell a 25-30% stake in Novo Banco via an initial public offering, rather than seek a full sale, Finance Minister Joaquim Miranda Sarmento said on Friday.

In September, three sources with knowledge of the matter told Reuters that Lone Star, which owns 75% of Novo Banco, was considering a full sale as well as weighing an IPO. The sources said Novo Banco was worth about 5 billion euros ($5.2 billion).

Novo Banco, Portugal's fourth largest bank, was created in 2014 from the Portuguese government's bailout of collapsed private bank Banco Espirito Santo.

Lone Star has owned its stake since 2017, with Portugal's resolution fund and the state owning the rest.

Miranda Sarmento said the government had been told by Novo Banco and Lone Star that the U.S. private equity firm wanted to carry out "an IPO of around 25% to 30% of the capital" of the bank.

He said the government "has never been informed that Lone Star is selling its entire 75% stake in the bank".

Novo Banco declined to comment. A request for comment has been emailed to Lone Star.

Although the top five Portuguese banks control more than 80% of the country's banking assets, analysts see room for further consolidation to improve competitiveness.

The board of Novo Banco, however, says the bank would be better off as a standalone lender.

In June, state-owned Caixa Geral de Depositos (CGD) CEO Paulo Macedo said the country's largest bank was considering "all the hypotheses" to buy another lender to preserve its market leadership in the face of expanding foreign banks, particularly from Portugal's larger neighbour Spain.

"If CGD decides to evaluate what the market conditions and what future developments may be, the government will then make decisions based on this evaluation, but we will not interfere in the management of CGD," Miranda Sarmento told reporters.

The other top banks in the country include Millennium bcp, Santander Portugal, which is owned by Spanish giant Santander, and BPI, owned by Spain's CaixaBank.

($1 = 0.9626 euros)

(Reporting by Sergio Goncalves; Editing by Mark Potter)