Chinese interest in Portuguese banks goes beyond Anbang Insurance’s potential acquisition of Novo Banco, the financial entity that inherited ‘healthy’ assets of the former Banco Espírito Santo, and also extends to Banco BPI, a major sector operator in Portugal and Angola.
Direct negotiations between the Bank of Portugal and Anbang Insurance for the sale of Novo Banco should be completed by the end of August. The process is also followed by Fosun International, at a time when BPI is preparing for the Spanish La Caixa to exit its capital, as reported by the newspaper El Confidencial.
The Spanish hold 44 percent of the bank, which controls Angola’s biggest bank (Banco de Fomento Angola) and is a shareholder in one of Mozambique’s top banks. According to the El Confidencial, Chinese investors are studying the acquisition, which BPI director Tiago Violas Ferreira had indicated was a good possibility last June.
In a Diário Económico interview Violas Ferreira stated at the time that talks were under way regarding the entry of a new partner in the bank, whose major shareholders include Angola’s leading entrepreneur, Isabel dos Santos.
Banco BPI is under pressure from the European Central Bank to dilute the weight of its operation in Angola, BFA, where its partner is Isabel dos Santos (49.9 percent), who has a pre-emptive right should part of the stake be sold.
Novo Banco also has a significant position in Angola (in Banco Económico, formerly Banco Espírito Santo de Angola) and Mozambique (Moza Banco), historically two of the most profitable markets, but where its presence should be reviewed following the entry of the new shareholder.
Before the final negotiation, which took place over the last several weeks, Anbang Insurance offered nearly USD3.5 billion for Novo Banco, also committing to increase capital by an amount still to be determined.
The proposal’s total value is more than USD4.2 billion, though the acquisition price may be less if the identified capital needs are more than expected, reports Diário Económico.
The biggest uncertainty in the process, as indicated by the Portuguese press, concerns the potential costs of legal cases involving Novo Banco, specifically one associated to a $835 million debt to the investment bank Goldman Sachs, which the Bank of Portugal shifted to the entity that inherited the former BES’s ‘toxic’ assets.
If negotiations with Anbang fall through, then Bank of Portugal plans to negotiate directly with the second-ranked in the process, America’s Apollo Global Management fund, and if that fails, with China’s Fosun International, which in Portugal already has a significant position in the insurance (Fidelidade) and health (Luz Saúde) sectors.
Novo Banco could thus become the biggest Chinese investment in Portugal, surpassing privatisation of the Portuguese state’s 21.35 percent stake in EDP in December 2011, in which China Three Gorges paid 2.69 billion euros and committed to invest a further 2 billion euros in EDP renewable energy projects until 2015.
The newspaper Sol reported that the deal would give Chinese investors 15 percent of Portuguese banking, adding to the 30 percent of the insurance sector (via Fidelidade, acquired by Fosun) and 45 percent of the energy sector (via CTG, EDP’s biggest shareholder).
The purchase of Novo Banco would result in Portugal overtaking Germany and France among main destinations of Chinese investment since 2000, with $11.5 billion invested, just below the United Kingdom ($16 billion), based on a recent comparative study by the Rhodium consultancy. MDT/Macauhub
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