Portugal postpones sale of rescued bank after offers fall short of amount needed by debtors

Economic Indicators Associated Press

The Bank of Portugal says it is postponing the sale of Novo Banco, the so-called good bank salvaged from last year's collapse of major lender Banco Espirito Santo, explaining that the offers it received were too low.

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The country's central bank said Tuesday that European bank stress tests due in November also added uncertainty to the sale, as Novo Banco may require a hefty capital increase. It said the sale process will resume at a date to be decided.

Novo Banco received 4.9 billion euros ($5.5 billion) from a so-called bank resolution fund, a mechanism adopted during the eurozone debt crisis to support the financial sector. The Portuguese Treasury provided 3.9 billion euros of that, with other Portuguese banks providing the rest, and they want to recoup the full amount.