Novo Banco Set to Distribute €1.3 Billion in Dividends
After years of financial struggles, Novo Banco, the Portuguese bank created in 2014 from the ashes of the collapsed BES, is finally ready to share its profits with its shareholders. The bank’s majority owner, U.S. private equity fund Lone Star, and the Portuguese authorities are expected to receive a combined €1.3 billion in dividends in the coming months.
A Long-Awaited Payout
This significant payout marks a major milestone for Novo Banco, which has been working to recover from the multi-billion-euro state bailout that saved it from collapse. Since 2017, the bank has been 75% owned by Lone Star, with the Portuguese banking resolution fund and the state holding the remaining 25% stake.
Lifting the Dividend Ban
The path to this dividend payout was cleared last month when the three shareholders agreed to lift a ban on dividend distributions that had been in place since 2017. This move paves the way for a potential initial public offering (IPO) later this year.
A Testament to Recovery
Novo Banco’s financial health has improved significantly in recent years. The bank’s core Tier-1 fully loaded capital ratio stands at 20.7%, more than double the minimum requirement of 9.3%. This overcapitalization has enabled the bank to accumulate excess capital, making it possible to distribute dividends to shareholders.
A Welcome Windfall for the State
The Portuguese state, including the resolution fund and the Treasury, is set to receive more than €300 million in dividends in April or May. While this amount is a small fraction of the taxpayer funds invested in the bank, it marks a significant step towards recovering the state’s investment.
From Losses to Profits
Novo Banco’s financial turnaround is a remarkable one. After losing €1.3 billion in 2020, largely due to impairments linked to assets inherited from BES, the bank returned to profit in the following three years. In the first nine months of 2024, Novo Banco reported a consolidated net profit of €610 million.
Leave a Reply