LISBON, Sept 11 (Reuters) - The Bank of Portugal said on Friday negotiations with China's Fosun International over the sale of Novo Banco were proceeding and it would announce the results when ready, denying a report that the talks had been suspended.
Business daily Diario Economico reported earlier in the day that the sale process of Novo Banco would be suspended until after Portugal holds a general election on Oct. 4.
"In due time the central bank will announce the results of the negotiation process which it is carrying out to sell Novo Banco," the central bank said in a statement.
Citing sources close to the process, Diario Economico reported that the bid by Fosun was too low to lead to a sale. It said Fosun would only pay 1.5 billion euros for Novo Banco, the "good bank" carved out of the collapse last year of Banco Espirito Santo.
Novo Banco was created after a 4.9 billion euro bailout of BES in August 2014 and authorities are eager to recover as much of this amount as possible in the sale.
Under the terms of the bailout, Novo Banco must be sold within two years but the period can be extended by periods of one year if it is deemed in the public interest.
Still, financial sources have told Reuters that the talks with Fosun are complicated because Novo Banco has high risks, including litigation against it, that could depress the price.
New capital requirements by the European Central Bank could also dent Novo Banco's capital.
Talks between the central bank and China's Anbang Insurance Group Co - which was the top bidder in the sale process for Novo Banco - ended without agreement early this month.
(Reporting By Sergio Goncalves; Writing by Axel Bugge; Editing by Mark Heinrich)