Novo Banco SA, a Portuguese bank majority-owned by US private equity firm Lone Star, has initiated steps for its long-awaited initial public offering (IPO). The bank has selected Bank of America Corp., Deutsche Bank AG, and JPMorgan Chase & Co. to assist with the IPO process, according to sources familiar with the matter. Additional banks may be included in the process as preparations unfold.
Lone Star owns 75% of Novo Banco, while the Portuguese government holds a 25% stake through entities including the Resolution Fund, managed by the Bank of Portugal. The bank has been positioning itself for an IPO after significant restructuring in recent years.
The potential IPO comes after a period of financial recovery for Novo Banco, which posted its first profit in 2021. The bank also saw growth in net interest income, aided by rising interest rates. However, it had to address a high ratio of non-performing loans following its creation from the breakup of Banco Espirito Santo (BES), Portugal’s former largest lender, which faced a €5 billion rescue in 2014.
The move toward an IPO follows an agreement reached in December between the Portuguese central bank and Lone Star, which will enable Novo Banco to begin paying dividends, a necessary step for an IPO. Novo Banco plans to distribute a dividend of around €1 billion, with the Portuguese government potentially receiving about €300 million in 2025.
Novo Banco’s CEO, Mark Bourke, has stated that the bank is preparing for a possible IPO, which could take place as early as the second or third quarter of 2025, once market conditions stabilize. This move is part of a broader trend of potential IPOs in Portugal, which saw its first IPO in three years when insurer Fidelidade-Companhia de Seguros SA suspended its own IPO plans last year due to market instability.
If successful, the IPO will mark a significant step in the recovery of Novo Banco and the broader Portuguese financial sector.
