Portugal's Novo Banco has dismissed its chief risk officer Carlos Brandão following an internal investigation into suspicious financial transactions in his personal dealings, with the matter now under criminal investigation.

The Lisbon-based bank, Portugal's fourth-largest lender, announced the immediate termination on Tuesday, stating it had referred its concerns to the country's banking regulator and filed a complaint with the Public Prosecutor's Office.

"This decision was taken following the identification, through the bank's internal processes, of suspicious financial transactions in this individual's personal sphere," Novo Banco said in a regulatory filing.

The Attorney General's Office confirmed that search procedures are being conducted by its Central Department of Investigation and Criminal Action to gather evidence related to potential "qualified tax fraud, money laundering and forgery" by a bank director.

Novo Banco emphasised that the matter "has no impact whatsoever on clients, clients' accounts or transactions, on bank's finances or activity, on its commercial operations, risk management system or employees."

Brandão, who joined Novo Banco in July 2017 and had served as an executive board member and chief risk officer since September 2022, could not be reached for comment. His responsibilities will be temporarily assumed by chief executive officer Mark Bourke.

The development comes as Novo Banco, which is 75 per cent owned by US fund Lone Star, prepares for a potential initial public offering in 2025. The bank was established in 2014 from the remains of collapsed lender BES following a multi-billion-euro government bailout.

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