The sale of Portuguese state-rescued Novo Banco and its subsequent revamp by its new owner US private equity firm Lone Star was approved by European Union state aid regulators on October 11.

The European Commission said the restructuring would ensure the bank’s long-term viability.

As reported by the Reuters news agency, Novo Banco was carved out of Portugal’s biggest ever bank collapse in 2014 after a €4.9bn-billion rescue of Banco Espirito Santo.

“We have approved Portugal’s plans to grant state aid to Novo Banco under EU rules, based on the bank’s far-reaching restructuring plan and measures taken to limit distortions to competition,” European Competition Commissioner Margrethe Vestager said in a statement.

“Now it is important that the new owner successfully enacts the plan, so that that the bank can support the Portuguese economy,” she continued.

According to the European Commission, the new private owner to launch its ambitious restructuring plan aimed at ensuring the long-term viability of the bank, while limiting distortions to competition.

In its decision to approve the sale, the Commission assessed three issues under EU State aid rules: the competitiveness of the sales process of the bridge bank, Portuguese plans to grant additional state aid to finalise the BES resolution and bridge bank sale and the viability of the entity resulting from the sale of the bridge bank.