The US Lone Star fund, the company favoured by the Bank of Portugal to buy and manage Novo Banco, has invited a group of leading Portuguese companies to invest in the bank.
Amorim, Sonae, Jerónimo Martins and the Violas group all have received a formal invitation to join the vulture fund, if it successfully secures Novo Banco, and take up blocs of shares in the loss-making Novo Banco.
The Americans are desperate to inject a Portuguese flavour into their bid and aim to sell blocs of shares in the crippled bank to reputable Portuguese companies in an attempt to make its bid look more acceptable to the Bank of Portugal
The letters sent to the Portuguese companies include the description of some of Lone Star’s plans for the stricken lender, which requires billions in capital in the near future to prevent collapse.
The letter asked "potential co-investors to consider participating with Lone Star in the long-term control of Novo Banco and thereby share in the benefits resulting from its recapitalisation and restructuring."
The US fund wants to ensure that Novo Banco can lend "more than €6 billion per year to Portuguese customers, including €4 billion to companies."
The fund guarantees that it will "remain a shareholder of Novo Banco for several years," stressing that "previous experiences in bank restructuring have shown that these processes may take between five and ten years."
In addition, Lone Star undertakes to sell Novo Banco’s international operations to get some cash back to head office, leaving only the bank’s operations in Spain, so it can "serve and support Portuguese customers in one of Portugal’s main export markets."
While the bank of Portugal continues to dither over Novo Banco’s new owner, Lone Star is coming up with some inventive ways of appealing to the Portuguese bias of the vendors. Meanwhile, the bank is worth less and less with each week that passes.
There remain two candidates for the purchase of loss-making 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 scary state of the bank’s non-performing loan book.
According to the Ministry of Finance, the process of selling the loss-making bank is advancing with "a lot of intensity" and an announcement could be expected withing two weeks - this comment was made on January 29th.