French lender BPCE to buy Portugal's Novo Banco in major merger deal

In nan latest of a bid of cross-border merger dramas, France’s BPCE is acquiring a 75% liking successful Portugal’s Novo Banco from US backstage equity patient Lone Star.

The connection values nan lender astatine €6.4bn, making nan woody 1 of Europe’s largest banking transactions successful caller years. It besides reflects a caller activity of consolidation liking wrong nan sector.

The transaction is expected to adjacent successful nan first half of 2026, taxable to nan basal approvals from regulators and shareholders.

“This transaction enhances our expertise to service Portuguese families and businesses, deepens our committedness to nan nationalist economy, and secures a semipermanent early built connected strength, trust, and shared ambition,” said Novo Banco’s CEO Mark Bourke successful a regulatory filing.

Novo Banco was established successful 2014 by nan Portuguese cardinal slope arsenic nan "good bank" carved retired from nan collapsed Banco Espírito Santo. BES was 1 of Portugal’s oldest and astir salient lenders earlier its nonaccomplishment during nan eurozone financial crisis.

In 2017, aft complete 2 years of grounded attempts by nan Portuguese authorities to privatize Novo Banco, Lone Star acquired a 75% liking by injecting €1bn successful capital.

The remaining 25% remained nether nan power of nan Portuguese solution money and nan state, arsenic is still nan lawsuit today.

The years pursuing nan acquisition were analyzable for Lone Star. Novo Banco dealt pinch hefty bequest losses from bad loans, which jeopardised nan lender's financial position. But successful 2021, nan slope turned a area by posting its first profits.

Since then, nan lender has built itself up arsenic a awesome subordinate successful nan Portuguese financial scene. According to Novo Banco’s first 4th net report, nan lender held €43.72bn successful nett assets and posted a return connected tangible equity of 21.7%.

BPCE has already initiated conversations pinch Portuguese authorities regarding nan imaginable acquisition of nan remaining 25% stake, meaning nan woody could yet germinate into afloat ownership.

For now, however, nan French slope is still diversifying its geographic footprint by entering a 2nd halfway unit marketplace successful Europe.

It besides increases its vulnerability to adaptable complaint loans, which are much communal successful Portugal than successful France.

A competing connection had been considered from Spain’s CaixaBank, which already owns Portuguese lender BPI, but nan Portuguese authorities had doubts astir expanding Spanish power successful its home banking sector.

The woody betwixt BPCE and Lone Star comes successful nan discourse of a broader inclination of cross-border banking mergers.

After years of subdued merger activity pursuing nan 2008 financial crisis, institutions for illustration UniCredit, BBVA, and Italy’s MPS are actively pursuing description strategies.

At nan aforesaid time, governments are gradually stepping backmost from antecedently nationalised banks, opening nan doorway for much backstage ownership.

Examples of this see UniCredit’s liking building successful Germany’s Commerzbank, pinch ownership now nearing 30%, and its partial ownership of Greece’s Alpha Bank (20%), on pinch BNP Paribas’ acquisition of AXA Investment Managers.

An ongoing merger saga is besides unfolding successful Spain, wherever nan country’s second-largest bank, BBVA, has launched a dispute nationalist connection to get its rival Banco Sabadell.