Venezuela Billionaire’s Bank to Buy Spain’s NCG After Rescue

Venezuela’s Banesco Group will acquire control of NCG Banco SA for 1 billion euros ($1.37 billion) as Spain lines up buyers for banks rescued under last year’s European-funded bailout.

Through its Spanish Banco Etcheverria unit, Banesco, controlled by billionaire Juan Carlos Escotet, will also buy two portfolios of written-off loans, Spain’s bank rescue fund said in an e-mailed statement yesterday. Etcheverria said in its own statement that its bid didn’t include any request for state aid.

The sale of 88.3 percent of NCG Banco to Banesco is a step forward for Spain as it seeks buyers for lenders nationalized under the 41 billion-euro bailout that prevented mounting losses at savings banks from overwhelming government finances. NCG Banco has 57 billion euros of assets and 672 branches, and was formed from a merger of savings banks in the region of Galicia. It needed 9.1 billion euros of aid to replenish its capital.

“It’s unqualified fantastic news that a foreign investor has come in to buy NCG,” said Luis Garicano, a professor of economics and strategy at the London School of Economics.

The bank rescue fund, known as FROB, had said on Dec. 16 that it received six binding bids for NCG Banco. Because Banesco beat the next-best offer by at least 200 million euros and 50 percent, a second round of bids wasn’t necessary, FROB said.

Banesco will pay 40 percent of the price when the sale closes and the rest in stages through 2018. NCG Banco may still have to cover a further 1 billion euros of asset losses that haven’t yet been accounted for by provisions, a FROB official, who asked not to be identified by name, told reporters today.

Spain’s next asset sale will be Catalunya Banc, a nationalized lender that needed total capital support of 12.1 billion euros. That sale process could start in January, the FROB official said.

Banesco Venezuela

NCG Banco earned 61 million euros in the first nine months of this year, following an 8 billion-euro full-year loss in 2012. Banco Etcheverria said in a filing yesterday that it would keep the majority of NCG’s branches.

Escotet said on his Twitter account today that he would maintain NCG Banco’s focus on the northwestern Galicia region and its workers. He controls 58.9 percent of Banesco in Venezuela and has a fortune of $1.1 billion, according to the Bloomberg Billionaires Index.

Banesco is one of three biggest banks in Venezuela in terms of assets, deposits and loans, according to the November report from Caracas-based Softline Consultores. It has opened branches in Panama, the U.S., Colombia, Curacao and the Dominican Republic. Banesco bought 70 percent of Banco Etcheverria in December 2012.

Banesco holds more than 207 billion bolivars ($32.8 billion) in assets in Venezuela, according to Softline. It is second only in the country to Banco de Venezuela SA, which former President Hugo Chavez expropriated from Spain’s Banco Santander SA in 2009.