A multi-billion-euro bid by Anbang Insurance for Portugal’s Novo Banco that would lead to the first Chinese acquisition of a systemically important European bank could be derailed as the offer deadline approches.
The Bank of Portugal has set a cut-off date of August 31 for exclusive talks on the deal with a single bidder, understood to be Anbang.
Of three shortlisted bidders for Novo Banco, the so-called good bank created out of the collapse of Banco Espírito Santo, Anbang is understood to have made the highest offer, at about €3.5bn, including a commitment to recapitalise Portugal’s third-largest lender by assets.
But several Lisbon and London-based bankers familiar with the transaction expressed scepticism over whether a deal with Anbang would be completed because of doubts over the financial conditions of sale and the implications of Chinese ownership.
They said there were signs that European Central Bank officials had privately expressed reservations over a Chinese group acquiring a systemically important eurozone lender and that the Bank of Portugal was getting cold feet.
Doubts over a deal with Anbang have grown following the Bank of Portugal’s insistence that the binding offers of the two other contenders — China’s Fosun International and Apollo Global Management, a US private equity group — remain “wholly valid”, despite its exclusive talks with one bidder.
Anbang is believed to have set an undisclosed limit on injecting new capital into Novo Banco, the bankers said, insisting that any additional amount determined by upcoming European stress tests would have to be met by Lisbon.
The Chinese group is also understood to have required protection from legal and credit risks to Novo Banco. Goldman Sachs International and New Zealand’s state retirement fund are among several litigants pursuing cases against the Bank of Portugal over the collapse of BES.
Created a year ago from the healthy assets of BES, Novo Banco was revived with an injection of €4.9bn in fresh capital from Portugal’s bank resolution fund, of which €4.4bn came from a state loan.
Any shortfall from the €4.9bn in the amount paid for Novo Banco will have to be made up by Portugal’s other banks, making the sale a sensitive political issue in the run-up to a general election in October.
If a sale to Anbang falls through, bankers expect the Bank of Portugal to resume talks with Apollo, understood to be the only bidder to have recently improved the terms of its offer. Fosun is widely seen as out of the running.
Some bankers see potential for a “Portuguese solution”, with Apollo buying Novo Banco and bringing in Portugal’s Banco BPI to run it. BPI is under pressure from the ECB to reduce its exposure to Angola, one of its main sources of income, and “needs more space in the domestic market”, one banker said.
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