The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Pierre Briancon

BERLIN, June 13 (Reuters Breakingviews) - A friendly bank deal with no government meddling has been a rare thing in Europe in the last few years. BPCE’s acquisition of Novo Banco could therefore boost the spirits of consolidation-hungry euro zone regulators. The French mutual bank is buying 75% of the Portuguese lender, which buyout firm Lone Star has turned around since 2017. The price looks reasonable given Novo’s profitability.

As an unlisted mutual, BPCE doesn’t have the option of using shares as an acquisition currency. So it is paying Lone Star in cash. But its hefty common equity Tier 1 ratio, now at more than 16%, will only shrink to 15% after the deal. The overall valuation of 6.4 billion euros works out at 1.7 times Novo Banco’s tangible book value, in line with its Iberian peers. It looks like good value since the target’s 20%-plus targeted returns beat most peers.

The French buyer will now enter negotiations with the Lisbon government, which still holds a 25% stake in the bank born from the 2014 restructuring of failed Banco Espirito Santo. The deal is the first case of BPCE CEO Nicolas Namias’ strategy to expand his retail operations in Europe. With Novo Banco, the Paris-based buyer is setting foot in an economy that will grow this year by nearly 2%, more than three times faster than France according to IMF forecasts.

As with all cross-border deals, this one brings risks. The French bank will have to be subtle in dealing with unavoidable cultural tensions when taking over a foreign rival. Lone Star had already cut costs, jobs and branches, so there are few if any easy wins to extract from the deal. Boosting growth looks like the only path ahead. There is space left to do that, since Novo Banco only accounts for around 10% of its home retail market and 12% of its corporate market, according to a person familiar with BPCE’s plans.

Regulators at the European Central Bank, who have long called for more cross-border consolidation in the sector, will cheer at the deal, which BPCE presents as the biggest in the euro zone in more than 10 years. But the tie-up does not, in itself, set a trend. Political meddling remains alive and well elsewhere. Just look at the German opposition to Italian lender UniCredit’s CRDI.MI pursuit of Commerzbank CBKG.DE, or the local hostility to even domestic dealmaking in Spain and Italy. BPCE-Novo looks like the exception that proves the rule.

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CONTEXT NEWS

France’s BPCE will buy private equity firm Lone Star’s 75% stake in Novo Banco, the parties said on June 13. The deal values the lender’s overall equity at 6.4 billion euros.

(Editing by Liam Proud; Production by Streisand Neto)

((For previous columns by the author, Reuters customers can click on BRIANCON/pierre.briancon@thomsonreuters.com))