Three options were being considered by the US fund Lone Star, Novo Banco's majority shareholder (75%): an IPO, a sale to CaixaBank or BPCE. In the end, France's second-largest bank won the bid. The Portuguese government and the bank resolution fund, which hold the remaining 25%, benefit from a sale clause on the same terms as Lone Star. BPCE says that discussions are underway with local authorities.

A two-pronged approach

For two years, and until a few days ago, the private equity fund had been considering an IPO.

The scenario of a direct sale gradually gained momentum and the idea of playing on two fronts was born. Some call this a "dual process," which consists of evaluating opportunities to ultimately obtain the best price.

BPCE's offer won the day, especially as CaixaBank, a direct competitor, did not have the support of the Portuguese government. In May, Finance Minister Joaquim Miranda Sarmento had opposed a strengthening of Spanish positions in the sector, which is already dominated by Iberian creditors, who hold a third of the market.

A profitable gem in southern Europe

Novo Banco, the successor to Banco Espírito Santo, which was liquidated in 2014, has been restructured and is now highly profitable, with a cost/income ratio of less than 35% and a return on tangible equity of over 20%. BPCE is thus expanding its presence in Portugal, a growing market, and is part of its "Vision 2030" strategy, which aims to increase its European footprint. The plan to create an asset management giant with Italy's Generali is also part of this strategy.

Banking integration struggling

Despite the strategic importance of size in the banking sector, major consolidation moves are struggling to materialize. The beginning of the year was marked by bold attempts by Unicredit, which made multiple approaches to acquire Banco BPM in Italy and Commerzbank in Germany. However, these ambitions were quickly met with resistance from national governments keen to preserve their financial sovereignty.

Faced with these obstacles, medium-sized banks appear to be more accessible targets that are less politically sensitive. The acquisition of Novo Banco should not face any regulatory constraints, especially since Novo Banco was already owned by a private fund.