LISBON, Dec 10 (Reuters) - Portugal's fourth-largest

bank, Novo Banco, is ready to explore opportunities of going

public to diversify its shareholder base as it hopes to remain

an independent entity, the executive board said in an email to

employees late on Monday.

Novo Banco was created in 2014 from the remains of collapsed

lender BES after a multi-billion-euro government bailout.

U.S. fund Lone Star acquired a 75% stake in 2017 and has

since focused on de-risking, closing subsidiaries abroad, and

offloading bad loans and real estate under tough restructuring

commitments dictated by the bailout. The Portuguese banking

resolution fund and the state own the remaining 25% stake.

Last week, the shareholders agreed to end of the contingent

capital mechanism, allowing the bank to start paying dividends

and paving the way for any potential ownership changes, whether

via an initial public offering or direct sale.

"We are now in a position to explore opportunities in the

capital market that allow us to diversify our shareholder base

and consolidate our position in the Portuguese financial

sector," the board said in the letter.

Sources with knowledge of the matter told Reuters in

September that Lone Star was considering a sale as well as an

initial public offering.

Analysts see room for further consolidation in the

Portuguese banking sector. The board, however, argues Novo Banco

will be better off as a standalone lender.

"Being an independent bank is our goal, supported by the

discipline and consistency of execution of our strategy, proven

by three years of solid commercial and financial performance,"

it said.

Novo Banco lost 1.3 billion euros ($1.37 billion) in 2020,

pressured by impairments still linked to assets inherited from

BES, but returned to profit in the following three years.

It made a consolidated net profit of 610 million euros in

the first nine months of this year.

($1 = 0.9493 euros)