Novo Banco, a Portuguese bank led by Mark Bourke, former CFO of AIB, has received bids from French banking group BPCE and Spain's CaixaBank. Lone Star, the US private equity firm that owns 75% of Novo Banco, is considering either selling the bank outright or pursuing an initial public offering (IPO). A decision on the preferred option could be made soon, possibly within the week.

Bourke, who became CEO of Novo Banco in 2022, previously helped AIB through its IPO in 2017. The Portuguese government holds a 25% stake in Novo Banco through various entities, including the Resolution Fund. Analysts estimate the bank's value to be between €5.5 billion and €7 billion.

An acquisition by either BPCE or CaixaBank would mark a significant cross-border banking deal in Europe, although recent government interventions in Spain, Italy, and Germany have complicated such transactions. Portuguese Finance Minister Joaquim Miranda Sarmento has expressed concerns about increasing Spanish bank presence in Portugal, noting that they already control about a third of the market.

CaixaBank's shares fell by 0.4% in Madrid, and the bank already owns Banco BPI, Portugal's fifth-largest lender. Novo Banco ranks as the fourth-largest bank in Portugal and returned to profitability in 2021, benefiting from rising interest rates. The bank has worked to reduce its non-performing loans, which were among the highest in Europe following its establishment from the collapse of Banco Espirito Santo a decade ago.

Novo Banco's loan portfolio includes approximately €17 billion in corporate loans, €10 billion in mortgages, and €2 billion in personal loans, serving around 1.7 million clients. The bank has indicated its readiness for an IPO, which could be Portugal's first major public offering in four years. If Lone Star opts for this route, it may sell a 25% to 30% stake, potentially raising over €1 billion depending on investor interest.

Lone Star has engaged Bank of America, Deutsche Bank, and JPMorgan Chase as global coordinators for the IPO. Bourke mentioned that the bank is "well advanced" in preparing a prospectus for the offering, aiming for a launch as early as June.

Novo Banco was formed in 2014 after the Portuguese central bank intervened to rescue Banco Espirito Santo, which faced significant capital shortfalls. Lone Star invested €1 billion in Novo Banco when it acquired its stake in 2017, helping stabilize the bank during its recovery phase.