“The Bank of Portugal decided to select the potential investor Lone Star for a definitive phase of negotiations, in conditions of exclusivity, with a view to finalising the terms of the sale of the Resolution Fund’s stake in Novo Banco,” the central bank said in a statement.

ON 4 January the BdP had identified Lone Star as “the most well-placed entity” to conclude the acquisition of Novo Banco “successfully” announcing at the time that it would invite the fund to more “in-depth negotiations.”

According to the Portuguese press Lone Star’s proposal for Novo Banco outlines sharing future dividends with the Resolution Fundo, which is a positive for the central bank, but also demands state guarantees for potential losses that Novo Banco may yet have to take on, which the Government has refused.

Novo Banco is the transitional bank that kept the healthy assets of Banco Espírito Santo (BES), which was bailed out by the state on 3 August 2014, and which is now being sold.