Novo Banco has started to sell off non-core assets with two deals in two days helping to reduce liabilities and boost the loss-making bank’s cash position and capital ratios.
The sale of a 40% stake in road toll operating company Ascendi leaves Novo Banco with €240 in cash and the other seller, Mota-Engil with €360 million by reducing its shareholding from 60% to a minority stake.
"This transaction is another important step in the process of divesting non-strategic assets of the new bank, which continues its strategy of focusing on banking," said Novo Banco.
A second deal for the ailing bank was announced today with the sale of the entire share capital of Novo Banco Ásia to the Well Link group based in Hong Kong.
The completion of the sale now depends on the necessary approvals from the Bank of Portugal and from the Monetary Authority of Macão but no problems are expected.
No price was mentioned in the advise sent to the Stock Marker Securities Commission but the net profit will have a significant positive impact on the Common Equity Tier I capital ratio of Novo Banco and "represents another important step in the process of divesting non-strategic assets, allowing the bank to continue to focus its strategy on its domestic banking business."
Novo Banco has managed to lose €1.8 billion in its two year existence, making it an unattractive purchase proposition. Despite this and other structural problems, four offers have been submitted to the Bank of Portugal to take over the bank which was born from the wreckage of Banco Espírito Santo in August 2014.
One the financial downside, but still positive news, Novo Banco has sold shares it held in technology funds to Sonaecom IM, a subsidiary of Soneacom which in turn is owned by Sonae Group. Current group retail brands include Continente supermarkets, NOS, Mó, Maxmat, Público and Worten.
Sonae IM has bought three venture capital funds from Novo Banco: Fundo de Capital de Risco Espirito Santo Ventures II, Fundo de Capital de Risco Espirito Santo Ventures III and the Fundo de Capital de Risco Espírito Santo Santo Ventures Inovação e Internacionalização.
In a statement, management explained "Novo Banco entered into a purchase and sale agreement with a group of investors led by Sonae Investment Management - Software and Technology for the sale of three funds including the sale of the entire share capital of Espírito Santo Ventures - Sociedade de Capital de Risco."
“The completion of the transaction is dependent of the necessary approvals, including from the Bank of Portugal.
“Completion of the transaction will have a marginally negative impact on Novo Banco’s Common Equity Tier I capital ratio.
Sonaocom added in a statement, "Sonae IM, focused on investing in technology companies in retail and telecommunications, has an active management strategy for its portfolio in order to consolidate its investor position internationally."
The only problem with these asset sales, while Novo Banco itself is up for sale, is that bidders may have expected the bank to come with a full set of subsidiaries and shareholdings rather than selling them off at the 11th hour.
