LISBON, March 31 Portugal has agreed to sell a
75 percent stake in state-rescued lender Novo Banco to U.S.
private equity firm Lone Star in exchange for a capital
injection of 1 billion euros into the institution, the Bank of
Portugal said on Friday.
"The sale is an important step for stability of the banking
system," Bank of Portugal Gov. Carlos Costa told reporters. "The
agreement allows to meet the deadline set jointly with the
European Commission for the sale of Novo Banco."
Portugal's Bank Resolution Fund will retain the remaining 25
percent stake in Novo Banco, which is the bridge bank carved out
of Banco Espirito Santo, which crumbled in 2014. The country
injected 4.9 billion euros, mostly via the resolution fund, into
the 'good bank'.
Under the terms of the deal, Lone Star will inject 750
million euros when the deal is formally closed and another 250
million within three years.
Also, Novo Banco will swap 500 million euros of senior bonds
for new bonds as means to reinforce its common equity Tier 1
capital ratio before Lone Star takes over the bank.
The Bank of Portugal said a contingent capital mechanism
will be set up to meet potential capital needs at the bank worth
up to 3.89 billion euros, explaining that the mechanism did not
represent any guarantee to cover any losses.
(Reporting By Sergio Goncalves, writing by Andrei Khalip,
editing by Axel Bugge)