Novo Banco leaves Cape Verde after sale to Bahraini group

The financial institution sold its remaining 10 per cent stake in iib CV to the Persian Gulf group that owns the other 90 per cent, the chairman of the holding company revealed in an interview with Negócios. Novo Banco declined to comment.

Novo Banco has sold its 10 per cent stake in Cape Verde’s iib CV to the group that already owns the rest of the financial institution’s capital, revealed the iib Group’s chairman, Sohail Sultan (pictured), in an interview with Negócios, without mentioning the value of the operation.

‘Novo Banco had the right, which it exercised at the end of last year, to sell us the stake. The transaction was finalized a week ago,’ says Sohail Sultan. ‘We now have 100 per cent,’ he concludes. Contacted by Negócios, Novo Banco declined to comment.

The group, which has banks in the Middle East, West and East Africa and the Caribbean – and which has expressed its intention to buy a bank in Portugal – will not, however, hold all of iib CV’s capital permanently. ‘Our intention is to open up the share capital of the Cape Verdean organization and attract other international investors, as well as local investors,’ says Sohail Sultan. How much? ‘Our intention is to see if we can sell the 10 per cent we’ve acquired,’ he adds, explaining that ‘to the extent that we need additional capital at some point in the future, we would potentially consider issuing more shares and going public even more. But right now, it’s not a priority and all the capital requirements for the bank are either being met by the group or being generated through the success of the operation,’ he says.

As for the profiles of the possible buyers of the minority stake he wants to sell, the chairman of the iib Group says he would like to ‘have shareholders in Cape Verde who can support the bank’s continued growth and expansion. Not only in Cape Verde, but also in the Portuguese-speaking and African countries where we operate,’ he continues. The Bahraini group’s strategy is to take advantage of opportunities in markets where European banks have reduced their activity, either of their own volition or under regulatory pressure.

In 2023, iib CV achieved its highest ever profit: 6 million euros, 55 per cent up on the previous year.

Is BCA a closed case?

The Persian Gulf group’s ambitions for Cape Verde suffered a setback last March when it was rejected in its bid to buy almost 60 per cent of the capital of Banco Comercial do Atlântico (BCA) from Caixa Geral de Depósitos (CGD), a deal in which the Portuguese public financial institution pocketed around 16 million euros. The winner of the race was Coris Holding, which is based in Burkina Faso.

The deal is awaiting the green light from the central banks of the two countries and Sultan is already open to returning to the dossier if the operation doesn’t succeed. ‘Ultimately, it will be up to the regulators to determine whether the sale of BCA by Caixa Geral de Depósitos to Coris is approved or not. If, for whatever reason, that doesn’t happen, we’re ready to take part in the process again and we hope we can be successful next time,’ he says, insisting that “if there are any concerns about the sale process, we’ll be happy to interact with CGD again to see if there’s a possibility of the sale being made to ourselves.” In this scenario, the outcome of BCA and iib CV is set: they will be merged into one.

Growing balance sheet

The iib Group, reflecting the evolution of the global financial system, had a positive year in 2023. The Bahraini group doesn’t disclose business figures, but Sohail Sultan says that the balance sheet grew by 10 to 15 per cent on a consolidated basis compared to 2022. Partly thanks to the bank’s performance in Cape Verde. ‘When we bought iib CV, it was a problem bank. It was the smallest bank in the country. By the end of last year, we were probably the third largest bank in terms of assets,’ he emphasizes.

For the group’s banks as a whole, Sultan predicts a more positive 2024 than last year and a slowdown in 2025.

The three names and three owners in the history of the current iib CV

The current iib CV has had two other names and owners. The financial institution that was part of the Espírito Santo universe (until 2015 it was called BES Cabo Verde) was part of the assets inherited by Novo Banco in the BES resolution process. In November of that year it was renamed Banco Internacional de Cabo Verde (BICV). Two years later, the Portuguese financial institution reached an agreement with the iib Group for the sale of 90 per cent of the capital, while retaining the right to exercise the right to sell the remaining 10 per cent, which it would do at the end of 2023, says the chairman of the Bahraini group. Contacted by Negócios, Novo Banco declined to comment. The iib Group’s entry into the capital was realised in 2018, after Novo Banco’s attempt to sell to José Veiga failed.

iib makes a bid for BNI. ‘We want to be in Europe’

After failing to buy Banco Comercial do Atlântico (BCA) from Caixa Geral de Depósitos (CGD), the iib Group continues to focus on organic growth and acquisitions.

After failing to buy Banco Comercial do Atlântico (BCA) from Caixa Geral de Depósitos (CGD), the iib Group is continuing its double focus on organic growth and acquisitions. Reiterating his desire to enter the European market via Portugal, chairman Sohail Sultan says he has already made an offer to buy BNI Europa, whose profile – presence in Africa and the old continent – fits in with the group’s objectives for Europe and Africa.

BNI is looking for a buyer. Are you interested?

We took part in the initial process and are waiting to see how the seller decides to take the process forward. As far as we know, they have received a number of proposals and are analysing them. From the outset we made it clear that we are interested in acquiring a regulated financial asset in Portugal. There will be a number of considerations in determining the appropriate asset. To the extent that we can acquire a bank in Portugal, we would be interested in doing so.

Did you make a specific proposal to acquire the bank?

The first phase called for indicative offers from bidders. Several bidders submitted proposals, including iib. At the moment, we’re still waiting to see how the seller intends to progress, if at all.

Can you disclose the bid figures?

Not at the moment.

When do you expect to know if iib Group’s bid will go to the second phase?

We haven’t received any indication. I believe there are only a handful of international proposals.

BNI is in Portugal, but has a very strong and obvious connection to Angola. How does this fit in with your global strategy?

You’ve summarized it well. It’s an interesting asset and, if there’s an opportunity to move forward in discussions with the seller, we’d be very happy to do so because BNI has both these characteristics.

If your proposal doesn’t have the outcome you’re hoping for, what other opportunities can you analyse?

There aren’t many opportunities at the moment, but we’ll keep an eye out, to the extent that a bank becomes available at a price we consider sensible, to see if we can actually finalise a transaction.

How is buying a bank in Portugal compatible with the group’s general strategy, which so far is focused on Africa, the Caribbean and the Middle East?

What Portugal, or more specifically a financial institution regulated by the European Union, would allow us is a degree of international connectivity for effective banking operations in the emerging markets space that we currently occupy. Being regulated in Europe, we would effectively have access to European payment systems, which are clearly valuable for any financial institution operating in the emerging market banking space. So I think that would be a very attractive factor for us, in terms of having a regulated asset in the European space. But in addition, we clearly see opportunities here to develop our commercial banking activity in a wider European market, possibly from a Portuguese regulated entity.

To put it simply: in addition to the geographies where you are already present, would you like to operate in Europe?

Yes.