Groupe BPCE has entered a deal to acquire Portuguese lender Novo Banco, valuing the business at €6.4bn ($7.4bn).

The deal will see the French bank purchasing a 75% stake in Novo Banco from Lone Star.

In a statement, the US private equity firm said: “Nani Holdings S.à. r.l., an affiliate of Lone Star Funds (“Lone Star”), today announced that it has signed a Memorandum of Understanding for the sale of Novo Banco, S.A.”

The transaction is expected to be completed in the first half of 2026, following consultations with employee representative bodies.

The companies were already in talks for the acquisition.

The Portuguese government, retaining the remaining 25% interest through various entities, including the Resolution Fund, also consented to sell its shares to BPCE, reported Reuters.

This acquisition continues a broader trend of banking mergers across Europe, both cross-border and domestic.

European regulators have been advocating for industry consolidation to create a more integrated financial sector and to maintain competitiveness against the increasing presence of US banking powerhouses.

BPCE CEO Nicolas Namias said:“Novobanco possesses excellent fundamentals, strong growth potential and an already high level of profitability. For its part, BPCE is a major banking player in France notably thanks to the Banque Populaire and Caisse d’Epargne banking networks.

“With the acquisition of novobanco, BPCE would become a retail banking player in Europe and would actively participate in financing the Portuguese economy. The projected transaction marks a key stage in the execution of its “Vision 2030” strategic plan, announced close to a year ago.”

Novo Banco has reduced non-performing loans and invested in digital transformation, enhancing the customer experience and reinforcing its position as a trusted partner for Portuguese households and SMEs.

With equity of €73bn, a CET1 ratio of 16.2%, and a global client base of over 35 million, BPCE is expected to bring “stability” and growth to Novo Banco.

BPCE will support Novo Banco’s aim to become a “leading” financial institution in Portugal, serving individuals, SMEs, and large corporates, Lone Star added.

Lone Star CEO Donald Quintin said: “We are proud to have supported novobanco’s transformation to become one of Europe’s leading and most profitable financial institutions. The bank has undergone a comprehensive transformation over the last eight years, becoming a trusted partner for Portuguese households and businesses across the country. BPCE shares our ambition for novobanco and is well positioned to take the bank forward as it continues to deliver for customers, SMEs and the Portuguese economy as a whole.”