Novobanco advised to delay IPO over tariffs uncertainties

Portuguese bank Novobanco, which was planning to float the bank’s capital on the Euronext Lisbon stock market in May, has been advised by analysts to put off the Initial Public Offering (IPO) until the nature of the US administration’s tariffs are clearer.

The bank, which is 75% owned by the US equity giant Lone Star, with the Portuguese State and the Resolution Fund holding the remaining 25% share, should, they advise, put off the floatation because of the high level of instability and volatility in the stocks and securities markets in recent weeks because of the ongoing trade war.

The analysts believe that it would be prudent to adjust the timetable for the IPO until such a time that investors have a clearer idea about what will happen regarding US tariffs.

According to the online news source ECO, if Novobanco were to go ahead now, a higher risk premium would be required, which would mean that the bank’s shareholders would receive less dividends on their shares.

“The current climate on the financial markets is one of a strong fall in prices that also affects the banks since they are institutions that are very dependent on the economic cycle and monetary policy,” said Sérgio Lago, a banking and markets professor at ISCTE university.

“The uncertainty created by the US’s trading policy is highly damaging to shareholder dividends. Therefore, it would be highly advisable to to await for some clarification on how the trade wars will pan out before starting this IPO”, he added.

António Nogueira Leite, a Novo SBE professor and former director of Caixa, agreed: “We still don’t know exactly how the trade war will develop”, which makes the IPO “more unpredictable”.