Portugal Novo Banco's balance to show no further capital needed

By Sergio Goncalves

LISBON (Reuters) - The opening balance sheet of Portugal's Novo Banco, the "good bank" carved out of Banco Espirito Santo after a state rescue, will show a solvency ratio above the required minimum and no need of further capital, two sources familiar with the process said.

The state rescued Portugal's largest listed lender in early August with a 4.9 billion euro (9.73 billion pound) package, mostly in public funds, after the business empire of its founding Espirito Santo family collapsed under a mountain of debt. The bad bank, BES (LS:BES), inherited all the toxic exposure.

Some analysts have had doubts whether the capital injected into Novo Banco is enough to guarantee adequate solvency as required by Portuguese and European regulators.

The new bank, which the state plans to sell to recover the rescue funds, has been working on its opening balance since August, and the document is almost ready to be audited.

One source close to the process said on Friday that, although the balance sheet is to be finalised by Novo Banco next week, it is already certain that the bank will not need additional capital. Its common equity Tier 1 capital will be comfortably above the minimum 7 percent required by the Bank of Portugal, the source said.

Another financial sector source said the solvency ratio as of now is above 8.5 percent and would exceed 8 percent even if auditors choose to be "ultra-conservative".

When it devised the rescue plan, the Bank of Portugal said the capitalisation would leave Novo Banco with an 8.5 percent capital ratio.

The second source said the bank's first balance sheet is practically finalised, with only minor details on how to classify certain assets still to be clarified. Auditors PWC have already been checking parts of the books, but the whole auditing process is likely to take up to three months.

The first source said auditing should be completed between the end of November and late December.

Novo Banco and Bank of Portugal spokesmen declined to comment.

Economy Minister Antonio Pires de Lima recently said it would be reasonable to expect the sale to take place next year.

Portugal's central bank has begun sounding out Spanish banks such as Sabadell and Popular (MC:POP) on their interest in buying Novo Banco, according to several sources familiar with the talks.

(1 US dollar = 0.7986 euro)

(Writing by Andrei Khalip; editing by Jane Baird)