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Report: BlackRock, PIMCO, Goldman Sachs excluded from Novo Banco sale process

TheNovo Banco SAsale process willexclude 25 potential investors including BlackRock Inc., PacificInvestment Management Co. LLC and because theycontested theBanco Espírito SantoSA resolution, Jornalde Negócios reported April 8, without citing sources.

Accordingto the rules for the sale process, no organization that has legally challenged theBES resolution or any other decision connected to the central bank interventionwill be considered as potential acquisition candidates, the paper reported.Goldman Sachs filed lawsuits in London and Portugal in connection with an$835 million structured loan made to BES weeks before its failure in 2014.Investors including Brazilian investment bank and activisthedge fund Third PointLLC fileda legal challenge against the Banco de Portugal rescue process in 2014, whichtransferred subordinated creditors to a bad bank. BlackRock and PIMCO are among14 asset managers that have filed a lawsuit against the Portuguese central bank in a bid torecoup investments in Novo Banco that were written down at the end of 2015.

NovoBanco is the good bank created as a result of a 2014 BES central bankintervention, and needs to be sold by August 2017. A roadshow that began in thefirst week in April is testing the interest of strategic buyers and referenceinvestors for Novo Banco in Europe and North America, according to Jornal de Negócios. Investors' feedbackshould help Central Bank Governor Carlos Costa decide if a direct sale tostrategic investors or an IPO would be the better option.

Meanwhile,Novo Banco is set to post a loss of €455 million in 2016 and a loss of €195million in 2017, before returning to profits in 2018, Jornal de Negócios reported in another article on the same day,which cited a restructuring plan approved by the European Commission.

Between2016 and 2020, Novo Banco will need to make provisions for nonperforming loans of€2.25 billion and another €681 million for other assets. Restructuring costsfor the period are expected at €227 million.

Separately,Novo Banco may have to make additional cuts to its staff and branch network ifit fails to reach the targets agreed with the European Commission, Jornal de Negócios reported in anotherApril 8 article. So far, the lender plans to make 1,000 employees redundantbetween Nov. 30, 2015, and 2016-end.