Novo Banco Wants to Reduce Non-Essential Assets by $2 Billion

Novo Banco SA, the lender that emerged from the break-up of Banco Espirito Santo SA plans to reduce non-core and non-productive assets by 1.8 billion euros ($2 billion) this year by selling real estate, loans, equity stakes and international operations.

A separate bank set up by Novo Banco to dispose of risky assets had 10.8 billion euros at the end of last year, the company said in a presentation posted on Portugal’s securities website Wednesday. It targets a reduction to 9 billion euros this year and 4.6 billion euros in the longer term.

The Bank of Portugal is restarting restarting efforts to sell Novo Banco after failing to draw sufficiently high bids last year. Last month, the central bank said it could be sold to a larger investor such as another lender or to a wider group of investors that could include initial public offering.

The side bank has 3.7 billion euros of loans for sale including real estate debt and loans used to buy shares, the Novo Banco said. Of that, about 45 percent are considered credit at risk with 82 percent provision coverage.

Real estate assets totaled 2.6 billion euros at the end of December, most of which are large properties. The bank plans to sell about 700 million euros this year for both the side bank and the commercial franchise.

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