BPCE acquires 75% stake in novobanco for €6.4bn
The Portuguese government praised the sale, while the Communist Party condemned it as a national betrayal and some argued that taxpayers ultimately lost due to BES’s unresolved legacy.
U.S. private equity firm Lone Star has reached an agreement to sell novobanco to French banking group BPCE for €6.4 billion, making the deal one of Europe’s largest banking transactions in recent years.
The deal, expected to close in the first half of 2026, gives BPCE full control of Portugal’s fourth-largest bank and enables the Portuguese state to begin recouping public funds used in past bailouts.
Lone Star, which acquired 75% of Novo Banco in 2017 for a symbolic sum but committed to capital injections, will walk away with nearly €5.8 billion: €4.8 billion from the sale and €1 billion in recent dividends.
This represents a profit of nearly €5 billion on its initial investment.
The sale of Novo Banco to France’s BPCE will allow the Portuguese state to slightly reduce the heavy financial burden it has borne from the bank.
Since 2014, Portuguese taxpayers have lent around €6 billion to the Resolution Fund to capitalise Novo Banco, but no part of this amount has yet been repaid.
Holding around 25% through the Resolution Fund (13.54%) and the Treasury Department (11.46%), the state could now recoup up to €1.6 billion from the transaction.
However, this amount is minimal compared to the public funds injected into Novo Banco.
BPCE eyes long-term investment
BPCE, France’s second-largest banking group, will gain a significant footprint in Portugal’s retail banking market.
With the acquisition, Portugal becomes BPCE’s second-largest market.
The French cooperative group has vowed to retain novobanco’s brand, management, and workforce, reassuring employees that no layoffs or restructuring are planned.
In a press conference, BPCE CEO Nicolas Namias emphasized the bank’s commitment to a long-term presence in Portugal, highlighting novobanco’s strong SME lending base and potential for growth.
“This is not about cost-cutting,” he said. “It’s a strategic investment.”
novobanco’s CEO Mark Bourke welcomed the deal, calling it “a turning point” and highlighting the institution’s transformation into one of Europe’s most profitable banks, with medium-term return on equity goals exceeding 20%.
Political and Regulatory Implications
The Portuguese government praised the outcome, noting that the deal avoids excessive concentration of foreign ownership in the sector, an indirect swipe at Spanish rival CaixaBank, which had also shown interest in the acquisition.
Finance Minister Miranda Sarmento noted that the BPCE deal supports national economic development and diversification.
Pending approval by the European Central Bank and antitrust authorities, the acquisition will not involve a public listing.
BPCE, which already operates in Portugal through Natixis, Oney, and Banco Primus, will integrate novobanco’s 4,200 employees with its existing local workforce of about 3,000.
In contrast, the Portuguese Communist Party (PCP) considered the sale of Novo Banco to be a “robbery of the Portuguese people” and announced it will propose legislation to bring the bank back under public control.
“The announced sale of Novo Banco to a French investment banking group is the culmination of a process that represents an unacceptable assault on the resources of the Portuguese people,” said the PCP in a statement.
The PCP reiterated that the history of Banco Espírito Santo (BES) and Novo Banco is one of looting national resources, stressing that the PSD/CDS government during the troika period protected the major shareholders of BES/GES, whose ownership remained untouched.
It added that subsequent Socialist Party (PS) governments made decisions that “abandoned the national interest,” such as the sale and contingent capital agreement, leading to the “fire sale of assets.”
The party said national interests were ignored throughout the process and accused the current PSD/CDS government of merely overseeing the handover of Novo Banco to a foreign group, thus becoming “an accomplice in this assault on national resources.”
Speaking to Antena 1, economist and professor at Porto Business School Filipe Grilo believes that the 6.4 billion euros falls short of estimates, demonstrating that Novo Banco was never able to recover from the inheritance left by BES.
“I’d say it's the best possible deal (...) This figure falls a little short of the estimates we had, even taking into account the money that was injected into Novo Banco by the Portuguese government. There was clearly a destruction of value when BES was transferred to Novo Banco. Ten years on, we still haven't recovered that value. That’s what this deal means,” he pointed out.
Also referring to the sale of the State’s 25% stake in Novo Banco, Filipe Grilo considered that the taxpayers were the losers: “clearly we taxpayers are losing out with this deal”.
Background: From BES to Novo Banco
Novo Banco was established in 2014 to manage the viable assets of the collapsed Banco Espírito Santo.
Its turbulent history includes multiple capital injections and public controversies, particularly following Lone Star’s acquisition.
From 2017 to 2020, the Resolution Fund poured over €3.4 billion into the bank to stabilize it.
Novobanco holds a 9% share in the individual customer segment and 14% in the corporate client sector within Portugal.
The bank serves 1.7 million individual clients and manages a corporate loan portfolio worth €17bn. Employing 4,200 staff, novobanco operates 290 branches and works with an extensive network of external partners.
In recent years, novobanco has become one of Europe’s more profitable banks, achieving a cost-income ratio below 35% and a return on tangible equity over 20%.
The sale marks the end of a long chapter of restructuring and public support.
For many, it signals a new phase in the Portuguese banking sector, one with stronger international partnerships and potential for renewed stability.