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EC clears Portuguese aid for Novo Banco sale, restructuring

The European Commission approved under EU state aid rules Portuguese aid for the sale of Novo Banco SA, saying the measures will allow its new owner, U.S. private equity firm Lone Star Funds, to carry out its restructuring plan, which the commission said will ensure the bank's long-term viability while limiting distortions to competition.

"Now it is important that the new owner successfully enacts the plan, so that that the bank can support the Portuguese economy," said Margrethe Vestager, the European competition commissioner.

As part of its decision, the commission noted that it assessed the competitiveness of Novo Banco's sales process, Portuguese plans to grant additional state aid to finalize the resolution of Banco Espirito Santo and Novo Banco, as well as the viability of the entity resulting from the sale of Novo Banco.

Novo Banco was created in 2014 as the "good bank" formed after Banco Espirito Santo's collapse.