Dos Santos says there was no deal

BY PORTUGAL’S undemanding standards, Banco BPI is in decent shape. Two Portuguese lenders, Banco Espírito Santo (BES) and Banif, have collapsed in the past two years. In September the government called off the auction of Novo Banco, the “good” bank salvaged from the wreckage of BES, because the bids were too low. As the euro crisis battered Portugal, BPI also suffered. But the country’s fifth-largest bank, with assets of €40.7 billion ($46 billion), returned to profit last year. (It was due to report earnings on April 28th, after The Economist went to press.) Its bad-loan ratio is 4.9%; the national average is a dismal 12%, says Fitch, a rating agency.

BPI’s biggest shareholder, CaixaBank, the third-largest lender in neighbouring Spain, sees promise: this month it made its second offer in just over a year for the 55.9% it does not already own. CaixaBank asserts that it can squeeze BPI’s cost-income ratio from 74%, far above the 57% average of its rivals, to below 50% in three years.

Yet the bid reflects urgency as well as hope. CaixaBank and…Continue reading