19 Jun, 2025

BPCE expected to clear low regulatory hurdle in €6.4B bid for Novo Banco

By Bea Laforga and David Hayes


Groupe BPCE's proposed takeover of Portugal's Novo Banco SA, which could become one of the largest cross-border bank deals in Europe for more than a decade, is expected to secure government support at a time when other major transactions are facing regulatory setbacks.

Under the proposal — which would value Novo Banco at about €6.4 billion — France-based BPCE would acquire a 75% equity stake from Nani Holdings S.à.r.l., an affiliate of US private equity firm Lone Star Americas Acquisitions Inc. It will also engage the Portuguese government to buy the remaining 25% stake on similar terms.

This would be the largest cross-border whole-bank M&A transaction in Europe's banking sector in more than 10 years, surpassing Banco Santander SA's 3.97-billion acquisition of Bank Zachodni WBK SA (now Santander Bank Polska SA), S&P Global Market Intelligence data shows. Santander's sale of a 49% controlling stake in Santander Bank Polska to Austrian bank Erste Group Bank AG has a higher price tag of €6.8 billion, but is not a whole-bank deal.

SNL Image

Benign regulatory reaction

The Portuguese government and competition authorities are not likely to oppose the deal because it involves a transfer between two foreign owners and BPCE has no pre-existing commercial franchise in Portugal, Marco Troiano, managing director and head of financial institutions at Scope Ratings, wrote in a June 17 note.

Analysts at Morningstar DBRS expect the deal to have less pushback from authorities than it would if a domestic a Spanish bank made an offer for Novo Banco.

"The Portuguese banking sector is already very competitive and was not in urgent need of additional domestic consolidation, and the prospect of Spanish banks making additional inroads into the Portuguese market looked complicated by politics across the Iberian Peninsula," DBRS wrote in a June 13 note.

When CaixaBank SA was rumored to be among the potential bidders for Novo Banco, the Portuguese government flagged potential risks that could arise from excessive dependence on a single foreign country like Spain, Reuters reported May 22.

Other large ongoing M&A deals — including UniCredit SpA's €10 billion bid for Banco BPM SpA and Banco Bilbao Vizcaya Argentaria SA's hostile €12 billion offer for Banco de Sabadell SA — have been under more scrutiny from governments. Italy imposed conditions on UniCredit's bid, citing the need to defend strategic interests and national security. Spain's government is concerned that a BBVA-Sabadell tie-up would center more power in Madrid at the expense of Sabadell, and may impose strict conditions that could eventually scupper a deal, sources told by Bloomberg News.

Diversification

The proposed takeover of Novo Banco would make Portugal BPCE's second-largest retail market, diversifying the French banking group's footprint which, until now, has been largely concentrated in its domestic market.

BPCE employs about 3,000 people in Portugal, where it has consumer finance subsidiaries Banco Primus and Oney Bank, and a multi-business center of expertise in Porto.

Should a deal materialize, BPCE said Novo Banco has the potential to generate more than €700 million in annual net income for the group, supported by its return on tangible equity of more than 20%. Novo Banco also has room for growth beyond its existing 9% market share in deposits and 10% in loans.

The bank — which was carved out of the bailed-out Banco Espirito Santo — has been recording steady improvement in its financial metrics since its creation in 2015. By 2024 it had surpassed the average of Europe's large banks in terms of profitability, cost efficiency and capital ratio, according to Market Intelligence data.

SNL Image

The acquisition, however, would not be transformational for BPCE as the Portuguese market will only account for around 3% of its total exposures, including off-balance-sheet exposures, Troiano said. It could be a blueprint for the BPCE's future inorganic expansion, he said.

The deal is expected to be signed in the third quarter and completed in the first half of 2026, subject to regulatory approval.

Greater competition seen

A Novo Banco with a well-capitalized industrial shareholder could be a catalyst for greater competition in the Portuguese banking sector, which is already one of the most consolidated in the region, Troiano said.

The country's five biggest lenders account for more than 70% of total banking assets, while the top two — state-owned Caixa Geral de Depósitos SA and Banco Comercial Português SA — control over 30% of customer loans and roughly 40% of deposits, respectively, according to the ratings agency.

"It will test the potential to leverage the group's (BPCE) retail and SME expertise to grow in a relatively small but competitive market," Troiano said.

SNL Image