By Sergio Goncalves
LISBON (Reuters) - Novo Banco, the lender carved out of Banco Espirito Santo (BES) (LS:BES), should be sold to the highest bidder and its sale should not be limited by a deadline, the head of Portugal's largest listed bank said on Monday.
The Bank of Portugal has said it wants to sell Novo Banco in the second quarter of 2015 to quickly recoup the 4.9 billion euros ($6.1 billion) of public funds used to rescue BES in August after it nearly collapsed under the debts of its founding family.
"The sale of Novo Banco should be based on price and not time," said Nuno Amado, chief executive of Millennium bcp (LS:BCP), at a banking conference.
"The sale should be to who pays the most. The most important is that the sale is carried out in the best conditions possible for the sector and for the economy."
A so-called bank resolution fund financed the rescue of BES and that fund belongs to Portugal's banks. As such, any losses from the sale of Novo Banco would hit the banks, even though the government lent the money to the fund to rescue BES.
Novo Banco was carved out as a 'good bank' from BES, while BES kept the toxic debts from the Espirito Santo family that sparked the collapse of the family's business empire. The collapse has led to an investigation into how the family amassed such huge debts and how it contributed to the problems at BES.
Novo Banco CEO Eduardo Stock da Cunha, speaking at the same conference, said the bank's profit margin was recovering and it could cut a significant amount of costs.
He added the bank's campaign to attract deposits for 92 days at a rate of 2.5 percent was paying off.
Some bankers have said if Novo Banco was sold too quickly it could lead to a low price.
"It is important that the cost to the (banking) system, in the long-term, is as low as possible," said Jose de Matos, CEO of state-owned Caixa Geral de Depositos, Portugal's largest lender.
Santander Totta, the Portuguese branch of Spain's Santander (MC:SAN), is watching the sale but has no direct interest, its CEO said.
"Our position is very clear: Santander Totta is very happy with its operation in Portugal and its organic growth," Antonio Vieira Monteiro said. "What it is doing is watching what is going on, but nothing more."
Separately, receivers for one of the Espirito Santo family's bankrupt holding companies are challenging in the courts the creation of Novo Banco and splitting of assets between it and BES.
(1 US dollar = 0.8006 euro)
(Reporting by Sergio Goncalves; Writing by Axel Bugge; Editing by Mark Potter)