Former AIB chief financial officer Mark Bourke, a key member of the team behind the bank’s initial public offering (IPO) eight years ago, is preparing for a flotation of Portuguese lender Novo Banco as early as next month in spite of recent volatility on global equity markets.
Mr Bourke, who joined Novo Banco as chief financial officer in early 2019 and became chief executive three years ago this month, said in an interview with Bloomberg on Tuesday that the draft prospectus for the transaction is “well advanced”.
“We continue to have the same timetable, which is aim for June,” Mr Bourke said. “If market conditions are conducive, that’s your first window. If not we go to September.”
Novo Banco, which emerged from the ruins of Banco Espirito Santo after the Portuguese bank’s collapse in 2014, has been 75 per cent owned by US private equity giant Lone Star since 2017.
Most of the remainder is in the hands of the Portuguese government and a domestic banking resolution fund.
The Lisbon-based bank reached a major milestone paving the way for its IPO in March when it paid its first round of dividends – amounting to €224.6 million. Shareholders approved a plan on Monday for a capital production, which is aimed at enabling the bank to distribute €1.1 billion of excess capital to its shareholders.
European banking stocks have advanced more than 20 per cent so far this year – strongly outpacing the pan-European Stoxx 600 index’s 5 per cent advance – helped by a strong rally from a slump in early April as global markets baulked at US president Donald Trump’s tariff policies.
The sector has been underpinned by strong earnings, dividends and stock buyback programmes.
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Mr Bourke was the second-highest ranking executive at AIB when the Government carried out an IPO of the bank in June 2017, in which it sold a 28.8 per cent of the company to stock market investors for €3.5 billion. The State has so far recovered €18.5 billion of AIB’s €20.8 billion crisis-era bailout.
AIB plans to buy back a further €1.2 billion of shares from the Government. Shareholder authorisation for that deal was granted last week, but is due to run out at midnight on Thursday.
AIB’s board must decide by then whether to proceed with the deal. The transaction has been priced at €6.26. However, the stock closed at €6.06 on Tuesday.
Portuguese finance minister Joaquim Miranda Sarmento said in January that Lone Star plans to sell a stake of 25-30 per cent of Novo Banco in an IPO.
The minister has also said that the government won’t interfere if state-owned bank Caixa Geral de Depositos SA decides to assess any possible interest in buying Novo Banco. Portugal will hold an early election on May 18.
JB Capital said in a research report in March that it estimates Novo Banco could be valued at between €5.5 billion and €7 billion.
Banco Espirito Santo, once Portugal’s biggest lender by market value, got a roughly €5 billion rescue in 2014 after regulators ordered it to raise more capital following the disclosure of potential losses on loans linked to companies in the family-controlled Espirito Santo Group.
The Portuguese central bank moved the lender’s deposits and most of its assets to Novo Banco. Lone Star then agreed to inject €1 billion in Novo Banco when it bought its stake in the bank in 2017.
Novo Banco, Portugal’s fourth-largest lender, made headlines on international financial pages in January when it fired it’s then chief risk officer, Carlos Brandao, and filed of a complaint to the country’s prosecutor’s office following an internal investigation into “suspicious financial transactions.
The case is said to centre around the origin of large amounts of cash deposited in Portuguese banks by individuals linked to Mr Brandao.
Despite the investigation being a serious matter, “it is not related” to the bank and has “no impact whatsoever” on the lender’s activities, Mr Bourke told staff in an email on the day that the sacking was announced.
The bank appointed former Lloyds Banking Group director Carmen Goncalves as chief risk officer in late March. – Additional reporting, Bloomberg
