The attempted sale of the Spanish subsidiary of the Portuguese Novo Bank still won’t start. The latest setback is the departure of several professionals front row of your unit private banking (high wealth management), the one with the most value. Although several entities have been interested in some of its assets, sources familiar with the situation assure that they have discarded them. Faced with this rejection, the entity considers the sale of the offices individually or in packages, and the conversion of the subsidiary into a small operating center for companies.
The rout of private bankers began in June, when its three most prominent professionals, Garikoitz Olabera, Fernando Coscollar and Eva María Quintero, signed by Deutsche Bank (At the time, advisor to the Portuguese bank in the sale process).
According to these sources, in recent weeks Novo Banco has left Olabera’s replacement as commercial director, Carlos Carrasco, has announced that he will leave the entity on January 30. His destination is not confirmed, but sources indicate that the most likely is March bench in Andalusia, where Carrasco is originally from.
It is precisely in that community that Novo Banco has suffered the last casualties: the Seville, composed by José Manuel Sobrino and María Jurado, and that of Malaga, formed by Eduardo Maldonado and Diego Merino, have signed for Andbank. The Andorran bank wants to set up its business with them in Andalusia, a region in which it had not been present until now.
Better to sign bankers than to buy the bank
Andbank is precisely one of the entities that has sounded like potential interested in buying Novo Banco in Spain, but the operation does not seem to make much sense after signing these teams. «Why sign a month and a half ago if you are going to buy it now? Or, why buy now if you have already booked what you were interested in, « asks one of the sources.
Keep in mind that the private banking business is based on the trust and in the personal relationship of the client with his banker. Therefore, it is usual that, if he signs for another entity, many of his clients go with him and take his portfolio. Hence, in many cases, competitors prefer to sign teams to buy entities. In addition, in the event of a purchase there is a risk that the bankers will leave with the clients and empty the entity of equity.
And that is what is happening at Novo Banco: competitors prefer to sign their bankers rather than buy the bank. And with these exits, its equity is increasingly reduced, which decreases the value of the entity and, at the same time, makes it difficult to sell.
Unattractive credit and deposits
Because this is not the only obstacle the Portuguese bank faces in finding a buyer. In private banking, Novo Banco has a network of agents that he takes a high percentage of the profit and that the new owner would have to assume. On the side of depositsIt has been one of the most aggressive entities paying interest despite the fact that the ECB rates are negative, which implies that this product loses money. And on the side of creditMuch of it is what is known as « Lombards », that is, loans granted with the guarantee of customer shares, subject to the ups and downs of the market.
As if that were not enough, Novo Banco lacks bank card in Spain; In other words, it is not a subsidiary, but a branch (the same legal entity with which ING operates in our country). The token would be its greatest attraction for a foreign bank that wants to enter Spain and, without it, its acquisition by someone who does not already have a local presence makes no sense.
Faced with this situation, the sources consulted assure that the only way out for the Portuguese entity will be sell your office network to other banks, either individually or in small packages. Something that will not be easy with Spanish banks embarking on a general closure of offices, the result of mergers or the need to cut costs given the zero profitability of the business with negative rates and the Covid crisis. However, Novo Banco has the advantage that most of its branches are in ‘prime’ areas of the main cities, and that is always attractive.
Regarding central services, its destination could be to become a ‘booking center’ (intermediation center) for credit to companies, especially real estate companies, managed from Lisbon. Which would require an additional reduction of the current workforce in our country.