Lone Star to sell Portugal’s Novo Banco to French BPCE, report says

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LISBON (Reuters) -U.S. private equity fund Lone Star has decided to sell its 75% stake in Novo Banco to French banking group BPCE in a deal that would value Portugal’s fourth-largest lender at around 7 billion euros ($8.14 billion), Portuguese economic news outlet ECO said on Thursday.

ECO said the “decision has been taken” and should be communicated to the market later on Thursday, without citing its sources.

Reuters was not able to independently verify the information. Lone Star and Novo Banco declined to comment and BPCE did not immediately respond to a request for comment.

If confirmed, Lone Star would be abandoning the option of an initial public offering for Novo Banco backed by the lender’s management.

Novo Banco was created in 2014 from the collapsed Banco Espirito Santo (BES) after a state bailout, with Lone Star buying its stake in 2017 for 1 billion euros.

Between then and the end of last year, the resolution fund injected 3.4 billion euros into Novo Banco to cover losses from a portfolio of toxic assets inherited from BES, as agreed with Lone Star.

The bank completed a turnaround last year, which involved selling its overseas operations and focusing solely on Portugal, sharply reducing non-performing assets and becoming profitable.

As of March, Novo Banco managed 30 billion euros of deposits and 28.5 billion euros of net loans, accounting for a market share of around 9% in Portugal.

Its market share of loans specifically to small and medium-sized companies was 18%.

It has almost 300 bank branches and more than 4,200 employees.

($1 = 0.8600 euros)

(Reporting by Sergio Goncalves in Lisbon, Jesus Aguado in Madrid and Mathieu Rosemain in Paris; editing by Andrei Khalip, Kirsten Donovan)