LISBON, Feb 3 (Reuters) - Portugal's parliament rejected on Friday proposals by the government's far left allies to halt the sale of rescued lender Novo Banco and nationalise it instead.
The ruling Socialists and centre-right opposition parties voted against the proposals by the Communists and Left Bloc, but the Socialists said nationalisation might be a last resort if all attempts to sell the bank failed.
Last month, the central bank picked U.S. private equity firm Lone Star to conduct further negotiations on the sale of the bank, which was carved out of collapsed Banco Espirito Santo (BES) in 2014.
"After two years ... it's clear that the sale process is difficult," senior Socialist lawmaker Joao Galamba said.
"The Socialist party does not see the nationalisation as absolute evil. It sees it as a possible solution, but only if the sale fails ... We believe that letting the negotiations run to the very end is what best protects the interests of the state and taxpayers," he said.
The Left Bloc and Communists are allied with the Socialist government and support rolling back austerity after Portugal's debt crisis. But they maintain some independent positions, such as bank nationalisations and debt renegotiation.
The first attempt to sell Novo Banco, which in 2014 received an injection of 3.9 billion euros in public funds, failed in 2015. Portugal had hoped to find a buyer by the end of last year in the second, current attempt, but has agreed a final sale deadline of August 2017.
Finance Minister Mario Centeno told Reuters last month that no option, including nationalisation, was ruled out, but anything other than a sale would have to be discussed with European authorities. (Reporting By Sergio Goncalves and Andrei Khalip, editing by Axel Bugge, Larry King)