Novo Banco CEO sees potential support for unblocking dividends, IPO in 2025

By Sergio Goncalves

LISBON (Reuters) - The three equity owners of Portugal's Novo Banco appear to be in agreement that they should lift a ban on the bank making dividend payouts, which would allow the lender to launch an initial public offering in early 2025, CEO Mark Bourke told Reuters on Thursday.

Novo Banco was created in 2014 from the Portuguese government's bailout of collapsed private bank BES. Since 2017 Novo Banco has been 75%-owned by U.S. private equity Lone Star, with the Portuguese resolution fund and the state owning the remaining 25% stake.

Novo Banco was banned from making dividend payouts until December 2025 as part of a contingent capital mechanism set up when it was sold to Lone Star in 2017.

However, Chief Executive Bourke said "there is a kind of common vision" of Lone Star, the Portuguese resolution fund and the state "that there is a benefit to a dividend block not being in place".

"This is a conversation that has to take place... if everybody agrees with everything, you know, almost immediately, then we would have a regulatory discussion about taking excess capital out," Bourke said in a telephone interview with Reuters.

Novo Banco, Portugal's fourth largest bank, is overcapitalized with a core Tier-1 fully loaded capital ratio of 19.9%, well above the minimum requirement of 9.3%, as it cannot distribute dividends.

Bourke also said the bank and supervisors would have to adjust the lender's minimum requirement for its own funds and eligible liabilities (MREL) to keep issuing senior debt.

"If the bank has everything in place and has regulatory permission to take excess capital out ... it (the IPO) could be any time from the start of next year," Bourke said, adding that "the business has been ready for 12 months", and the balance sheet would be ready by then as well.

Amid signs of a new wave of banking sector consolidation in neighbouring Spain, where BBVA is seeking a merger with Sabadell, Novo Banco is focused on an IPO as it wants to remain independent.

(Reporting by Sergio Goncalves; editing by Andrei Khalip and Susan Fenton)