US equity fund buys troubled Portuguese bank for $1 billion

AP News
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Posted: Mar 31, 2017 1:37 PM

LISBON, Portugal (AP) —  Portugal's government is selling the remnants of a bankrupt bank to the U.S. equity firm Lone Star for 1 billion euros ($1.06 billion).

Portugal's Central Bank announced Friday that the Dallas, Texas-based fund is buying 75 percent of Novo Banco. The other 25 percent will be sold later.

The decision did little to quell wider concerns about Portugal's beleaguered financial sector.

The 1 billion euros will be spent on recapitalizing Novo Banco, the so-called "good" bank salvaged from the 2014 bankruptcy of major lender Banco Espirito Santo. That means other Portuguese banks and the Treasury won't yet — and may never — get back the 4.9 billion euros they lent to Novo Banco.

Bad loans weigh heavily on the country's financial sector, with authorities providing 10 billion euros in aid since 2008.