The Irish chief executive of Portuguese lender Novo Banco, Mark Bourke, said on Thursday he was advancing plans to float the company early next year.
Mr Bourke, former chief financial officer of AIB, who was hired by Novo Banco in early 2019, initially as its chief financial officer, said on Thursday that the three shareholders in the bank appeared to be in agreement that a ban on the bank paying dividends should be lifted.
Such a move would allow Novo Banco, which was bailed out by the Lisbon government during the financial crisis, to distribute excess capital on its balance sheet and launch an initial public offering (IPO).
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.
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Novo Banco was banned from making dividend payouts until December 2025 as part of a contingent capital mechanism set up when it was sold to Lone Star in 2017.
However, Mr Bourke told Reuters on Thursday “there is a kind of common vision” between Lone Star, the Portuguese resolution fund and the state “that there is a benefit to a dividend block not being in place”.
“This is a conversation that has to take place... if everybody agrees with everything, you know, almost immediately, then we would have a regulatory discussion about taking excess capital out,” Mr Bourke said.
Novo Banco, the country’s fourth-largest lender, is overcapitalised with a core Tier-1 fully loaded capital ratio – a gauge of equity reserves relative to risk-weighted assets – of 19.9 per cent, well above the minimum requirement of 9.3 per cent because it cannot distribute dividends.
“If the bank has everything in place and has regulatory permission to take excess capital out... it [the IPO] could be any time from the start of next year,” Mr Bourke said, adding that “the business has been ready for 12 months”, and the balance sheet would be ready by then as well.
Mr Bourke was instrumental in preparing AIB for its €3.4 billion initial public offering in 2017.
Novo Banco reported on Thursday that its first-half net profit dipped by 0.8 per cent to €370.3 million, year on year. While net interest income and fees and commissions grew by 10.9 per cent to €161.2 million, this was largely offset as the bank increased loan loss provisions and set aside money for investment.
Total customer loans rose by 1.1 per cent from the end of December to €28.5 billion, it said. – Additional reporting, Reuters
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