French banking group BPCE has reportedly taken pole position in the bidding process to acquire Novo Banco, the Portuguese lender currently majority-owned by US private equity firm Lone Star Funds, according to a report by Bloomberg citing sources familiar with the situation.
The Paris-based banking group is said to be ahead of rival CaixaBank, with deal terms now under active negotiation. While no final decision has been made, Lone Star is weighing the sale against a potential IPO of Novo Banco.
A decision from Lone Star could come within days, though discussions remain fluid and may not result in a transaction. The potential deal would contribute to the $27bn in M&A activity recorded across the global banking sector year-to-date, per Bloomberg data.
Lone Star currently controls a 75% stake in Novo Banco, with the remaining 25% held by the Portuguese government via the country’s Resolution Fund. A March research note by JB Capital valued the lender at between €5.5bn and €7bn.
Novo Banco, the fourth-largest bank in Portugal, has undergone significant restructuring since emerging from the collapse of Banco EspÃrito Santo in 2014. Following years of deleveraging and NPL disposals, the bank returned to profitability in 2021. Its balance sheet currently includes €17bn in corporate loans, €10bn in mortgages, and €2bn in consumer credit, with a client base of 1.7 million.
An acquisition by BPCE – whose subsidiaries include Banque Populaire and Natixis – would mark a rare cross-border consolidation move in a regulatory environment that has recently cooled to such transactions. The governments of Spain, Italy, and Germany have each raised objections or imposed restrictions on similar banking deals in recent months.
Portugal’s Finance Minister, Joaquim Miranda Sarmento, added to the geopolitical backdrop in May, stating in a televised interview that Spanish banks should not further expand their footprint in the Portuguese market, where they already account for roughly one-third of banking assets.
BPCE, Lone Star, Novo Banco, and CaixaBank all declined to comment.
