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Portugal's Resolution Fund pumps $386 mln into Novo Banco

LISBON, June 5 (Reuters) - Portugal’s Resolution Fund said it had injected another 317 million euros ($386 million) into Novo Banco, which emerged from the collapse of Banco Espirito Santo (BES) in 2014.

The new injection on Friday is contentious in Portugal as Novo Banco is 75% owned by U.S. private equity fund Lone Star and because the state-backed fund, which has the remaining 25%, has already provided 3 billion euros in capital since 2017.

Although all Portuguese opposition parties are against any further injection of public money, the government last week authorized the resolution fund to do so.

The resolution fund said in a statement that the capital injection was carried out on Friday and was “fully financed” by a syndicate of seven Portuguese banks, which on Monday lent 475 million euros to the fund.

It said it could inject another 112 million euros into Portugal’s fourth-largest bank in the near future, but that depends “on the conclusion of a supplementary analysis”.

The fund is backed by all Portuguese banks which pay annual contributions and it can access loans from the state and banks.

Lone Star acquired the majority stake in Novo Banco in 2017, with the sale contract stipulating that the Resolution Fund must inject up to 3.9 billion euros in case of losses on the sale of some toxic assets inherited from BES.

The injection is meant to keep the bank’s solvency ratios at the required levels.

On Monday, Novo Banco reported quarterly profit of 70.1 million euros and a jump of 12% in net interest income, after losses running into billions of euros since its rescue. ($1 = 0.8220 euros) (Reporting by Sergio Goncalves; Editing by Alexander Smith)

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