A man walks near the logo of Portuguese bank Novo Banco in downtown Lisbon. Photo: Reuters, Rafael Marchante

The Bank of Portugal announced a deal on Friday to sell 75% of Novo Banco to US private equity firm Lone Star. Following the bank’s more than US$5 billion bailout in 2014, the search for a buyer has dragged on for more than two years, and the deal comes with strings attached for Portuguese banks.

As the Financial Times reports, Portugal’s bank resolution fund is obligated to inject additional capital should Novo Banco’s capital strength fall below regulatory requirements. The Bank of Portugal explained, however, that the “contingent capital mechanism” does not represent a guarantee to cover any losses, reports Reuters.

The resolution fund, which is jointly financed by all of Portugal’s banks, has already poured the aforementioned sum of more than US$5 billion into Novo Banco to salvage the institution.

Portugal’s Socialist prime minister compared the arrangement to an alternative of nationalizing the bank, pointing out that the state would have had to inject more than US$4 billion and would have been exposed to “limitless” liabilities.