Novo Banco bidder, Lone Star, has dropped its insistence that the Portuguese taxpayer should underwrite the bank’s non-performing loan book.
The US fund also is working with un-named Portuguese financial institutions and individuals to improve its image in the eyes of the Bank of Portugal.
Lone Star now seems committed to buying Novo Banco and is investing in improving its image by taking on one or more Portuguese partners for cosmetic reasons.
There remain two candidates for the purchase of Novo Banco, both North American: Lone Star and the Apollo-Centerbridge consortium.
China’s Minsheng dropped out due to lack of funds triggered by currency control problems and other simply faded away due the parlous state of the bank’s loan book.
According to the Ministry of Finance, the process of selling the loss-making bank is advancing with "a lot of intensity."
The expectation now is that within the next 15 days the Bank of Portugal will send an improved proposal for the sale of Novo Banco for Government’s consideration.
Meetings already have been taking place between Lone Star negotiators and Portuguese partners which the Americans admit will increase their chances of pulling off the deal, even though they do not need Portuguese funding.
The second US fund, Apollo-Centerbridge, also has Portuguese partners but is not thought to have changed its stance on State guarantees. There is still time to reconsider.
Finance Minister, Mário Centeno, told Eurogroup colleagues last week that negotiations between the Bank of Portugal with the Resolution Fund, and the interested parties are taking place "with great intensity."
Centeno said that the government has been following this negotion process, which is at an important stage, and that the conclusion should occur "soon."
