The Chinese group Anbang Insurance now is in exclusive negotiations to buy Novo Banco, announced the Bank of Portugal today.
Should Anbang Insurance fail to reach a satisfactory agreement, second in line is the US fund Apollo which is still keen. The other Chinese company, Fosun, is out of the running.
Anbang Insurance has put in a bid estimated at €4 billion, beating the other two shortlisted contenders for the ‘good bank’ that emerged from the wreckage of Banco Espírito Santo which went spectacularly bust last August.
The Treasury needed €4.9 billion to clear the account after the rescue package was hastily arranged using the Resolution Fund squeezed out of Portugal’s high street banks, and the taxpayer who is owed around €3.9 billion.
Fosun, which already owns substantial businesses in Portugal including insurer Fidelidade and Luz Saúde, is under a degree of unwanted pressure in its home market as its partnership with the Shangai Friendship Group has dragged the company into a real estate fraud investigation.
Anbang Insurance’s bid for Novo Banco will need to be looked at when details are released but it is confidently predicted that at least €1 billion of the headline price is for bolstering Novo Banco’s balance sheet and will not be available for distribution to taxpayers.
Angbang is China's largest insurance group and has been on a high profile spending spree of late with the notable purchase of the Waldorf Astoria hotel on New York's Park Avenue for USD1.95 billion (€1.78 billion).
The giant company also has snapped up the Belgian insurer Fidea, the Dutch company Vivat and Delta Lloyd Bank Belgium.
China’s recent economic worries and devaluation of its currency will benefit Chinese companies that have divested and own assets outside the home country. Profits will be earned in foreign currencies and when exchanged for yuan and distributed to Chinese shareholders will have grown on conversion.
In April, five companies were in the frame for the Novo Banco purchase despite continuing worries over open ended liabilities brought about by the suspect behaviour of the Bank of Portugal when dividing assets between the good and bad banks. Santander and Cerberus pulled out, leaving the two Chinese and one US company to compete.
The real estate company that Fosun is involved in back home has been caught out selling properties to the chairman of a Chinese state-owned company at a price well below the market rate.
The company statement read as follows, "We believe that the real estate sale prices were within the reasonable discount range offered for real estate in the economic environment of extreme downturn experienced at the time,” adding comically that "Fosun continuously supports the government's anti-corruption efforts."
Fosun would have fitted in so well here but Anbang Insurance looks to be the preferred bidder.
Anbang Insurance's website extolls the good works it carries out as part of its social responsibility programme, including "We have assisted reconstruction and helped homeless old people and children in disaster area." Hopefully this aid will no longer be restricted to China and will cover all territories in which it has made investments.
