Commission approves restructuring plan and support for sale of Novo Banco

Background and further information:

Portugal decided in August 2014 to put the bank Banco Espírito Santo (BES) into resolution under the country's resolution framework and determined the strategy for its resolution. To enable an orderly resolution, Portugal designed a number of support measures, included State aid for the transfer of certain BES assets to a bridge bank - Novo Banco.

The European Commission immediately approved these measures under EU State aid rules. BES shareholders and subordinated debt holders contributed fully to the costs of the resolution in line with burden-sharing requirements, limiting the amount of State capital needed by the bridge bank. Another aspect that enabled the Commission to approve the aid was Portugal's commitment to sell the bridge bank Novo Banco to limit distortions to competition.

As a result of the plan, Portugal carried out a first sales process but did not accept the binding offers it received. In December 2015, the Commission approved a one-year prolongation of the deadline to sell Novo Banco, so as to allow sufficient additional time for Portugal to carry out a second sales process. In March 2017, Portugal announced that it had signed a share purchase agreement with private equity fund Lone Star with contingent aid measures.

The sale of Novo Banco, concerned by the present decision, thus completes the 2014 resolution of BES. In this context, the Commission assessed the competitiveness of sales process, the additional measures to finalise the resolution of BES and support the sale of its bridge bank Novo Banco and the viability of the resulting entity.

The European Commission approved on 11 October 2017, under EU state aid rules, aid provided by the Portuguese government for the sale of Novo Banco.