In the latest of a series of cross-border merger dramas, France’s BPCE is acquiring a 75% stake in Portugal’s Novo Banco from US private equity firm Lone Star.
The offer values the lender at €6.4bn, making the deal one of Europe’s largest banking transactions in recent years. It also reflects a recent wave of consolidation interest within the sector.
The transaction is expected to close in the first half of 2026, subject to the necessary approvals from regulators and shareholders.
“This transaction enhances our ability to serve Portuguese families and businesses, deepens our commitment to the national economy, and secures a long-term future built on strength, trust, and shared ambition,” said Novo Banco’s CEO Mark Bourke in a regulatory filing.
Novo Banco was established in 2014 by the Portuguese central bank as the “good bank” carved out from the collapsed Banco Espírito Santo. BES was one of Portugal’s oldest and most prominent lenders before its failure during the eurozone financial crisis.
In 2017, after over two years of failed attempts by the Portuguese government to privatize Novo Banco, Lone Star acquired a 75% stake by injecting €1bn in capital.
The remaining 25% remained under the control of the Portuguese resolution fund and the state, as is still the case today.
The years following the acquisition were complicated for Lone Star. Novo Banco dealt with hefty legacy losses from bad loans, which jeopardised the lender’s financial position. But in 2021, the bank turned a corner by posting its first profits.
Since then, the lender has built itself up as a major player in the Portuguese financial scene. According to Novo Banco’s first quarter earnings report, the lender held €43.72bn in net assets and posted a return on tangible equity of 21.7%.
BPCE has already initiated conversations with Portuguese authorities regarding the possible purchase of the remaining 25% stake, meaning the deal could eventually evolve into full ownership.
For now, however, the French bank is still diversifying its geographic footprint by entering a second core retail market in Europe.
It also increases its exposure to variable rate loans, which are more common in Portugal than in France.
A competing offer had been considered from Spain’s CaixaBank, which already owns Portuguese lender BPI, but the Portuguese government had doubts about increasing Spanish influence in its domestic banking sector.
The deal between BPCE and Lone Star comes in the context of a broader trend of cross-border banking mergers.
After years of subdued merger activity following the 2008 financial crisis, institutions like UniCredit, BBVA, and Italy’s MPS are actively pursuing expansion strategies.
At the same time, governments are gradually stepping back from previously nationalised banks, opening the door for more private ownership.
Examples of this include UniCredit’s stake building in Germany’s Commerzbank, with ownership now nearing 30%, and its partial ownership of Greece’s Alpha Bank (20%), along with BNP Paribas’ acquisition of AXA Investment Managers.
An ongoing merger saga is also unfolding in Spain, where the country’s second-largest bank, BBVA, has launched a hostile public offer to acquire its rival Banco Sabadell.
