Portugal to use $875 million from Novo Banco sale to pay down debt

LISBON, July 22 (Reuters) - Portugal will use the net proceeds of 766.9 million euros ($875.11 million) from the sale of its stake in Novo Banco to France's Groupe BPCE to pay down public debt, according to an order signed by the finance minister and published on Wednesday.

• BPCE completed the acquisition of Portugal's Novo Banco in April for a final price of 6.7 billion euros ($7.65 billion), buying the lender created from the good assets of collapsed Banco Espirito Santo (BES) following its 2014 state-backed rescue.

• The Portuguese state and the banking resolution fund, which then owned 11.5% and 13.5% of Novo Banco respectively, sold their stakes alongside U.S. private equity firm Lone Star, which held the remaining 75% of Portugal's fourth-largest lender.

• In the order, published in the official gazette on Wednesday, Finance Minister Joaquim Miranda Sarmento said that the sale had "enabled a significant recovery of the public funds used in Novo Banco's restructuring."

• The 766.9 million euros in net proceeds received by the state from the sale "shall be used to pay down public debt," the order said.

• The government expects the country's public debt ratio to fall to 87.8% of gross domestic product this year from 89.7% in 2025, extending a sharp decline from a pandemic-era peak of 135.2% in 2020.

• The order said BPCE's acquisition of Novo Banco reinforced the French banking group's commitment to Portugal, "particularly through supporting and financing households, companies and the broader economy, while preserving competition in the Portuguese banking sector."

($1 = 0.8763 euros)

(Reporting by Sergio Goncalves; Editing by Mark Porter)