September 1, 2015 / 11:47 AM / 4 years ago

UPDATE 3-Portugal turns to second Novo Banco bidder after Anbang talks fail

(Releads, changes to explain Fosun picked for talks)

By Sergio Goncalves

LISBON, Sept 1 (Reuters) - The Bank of Portugal has failed to reach an agreement with China’s Anbang Insurance Group Co in exclusive talks over the sale of state-rescued Novo Banco and will now open talks with the second-placed bidder.

“As no agreement has been reached, the Bank of Portugal decided today to end those negotiations (with Anbang) and invite the second-placed potential buyer into negotiations,” the central bank said in a statement on Tuesday.

A source close to the process said China’s Fosun International had received an invitation to start talks on buying Novo Banco. “Fosun is the one that was invited, it has already been notified.”

Novo Banco is the “good bank” carved out of Banco Espirito Santo (BES) after a 4.9 billion euro ($5.5 billion) bailout in August 2014. BES, then Portugal’s second-largest bank, collapsed under the weight of its founding family’s debts in the country’s biggest financial collapse.

Portuguese authorities hope to sell Novo Banco to recover some of the money. They started the sale process in December and opened exclusive talks with Anbang earlier in August.

Earlier, two sources had told Reuters that U.S. fund Apollo Global Management had been invited to next negotiate with the central bank on buying Novo Banco.

The Bank of Portugal would not say who the potential buyers were and Anbang and Apollo did not comment. Without naming the buyers, the central bank said the third-placed bid remained “fully valid.”

Fosun said a statement: “After the decision of Banco de Portugal, Fosun would like to reaffirm its strong commitment to Portugal.”

Analysts have said bids for Novo Banco could be limited by concerns about legal challenges, including those launched by holders of commercial paper issued by the Espirito Santo group that was sold to BES clients.

“These negotiations are always complicated because there are risks over what comes afterwards, what comes from the Espirito Santo Group or BES, in other words potential legal cases,” said one of the sources.

Although most of the BES rescue package came from public funds, the capital came via the Bank Resolution Fund, the joint responsibility of Portugal’s banks, meaning any losses on the sale would be incurred by banks.

Portugal holds a general election next month and the government has been hoping to sell Novo Banco before its mandate ends, analysts say.

Novo Banco on Monday reported a first-half loss of 251.9 million euros.

$1 = 0.8878 euros Writing by Axel Bugge; Editing by Mark Potter and David Holmes

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