The fight for Portugal's banks

Portugal's banking sector used to be clearly defined. There was Banco Espirito Santo (BES), a venerable institution that had been family-owned for 150 years. Because of his influence and business ties, Ricardo Salgado, the financial empire's boss, was nicknamed Dono Disto Tudo, the Owner of All This.

Two other banks, Caixa Geral de Dépositos and Banco Comercial Português (BCP), surpassed BES in size, based on assets, but did not rival its influence. The rest of the industry was made up of small banks without international clout. Banking in Portugal was stolid, and overseen by an equally stolid central bank, Banco de Portugal.

But in 2014, BES went bust, crumbling under the mountain of debt accumulated by Salgado. From the ashes rose its "good bank" offshoot, Novo Bano, which was recapitalized to the tune of nearly 5 billion euros ($5.3 billion) by a special Resolution Fund created by the central bank.

The problems began when the country's financial institutions started handing out credits to companies and households without sufficient collateral. Then the financial crisis hit. As many banks were struggling to get their money back, several were pushed into bankruptcy.

Today, state-owned savings bank Gaixa Geral de Dépositos has emerged as the market leader. And banking in Portugal has gone from a stolid to a highly competitive industry, with big financial players lining up to bring the smaller ones into their fold.

A shark from Angola

One such predator is Isabel dos Santos, the daughter of Angola's corrupt president José Eduardo dos Santos. Backed by her family's fortune and influence, she has made it into the big leagues. Her 18.6-percent stake in Portuguese investment bank BPI makes her the company's second biggest shareholder, after Spain's CaixaBank.

In a move meant to position BPI as one of the key players in Portugal's banking sector, she has proposed merging with the medium-sized BCP bank. This would have the added benefit of keeping CaixaBank from completely taking over BPI.

The merger would also increase Angola's influence in Portugal: The Angolan oil company Sonangol holds a majority stake in BCP. The state-owned energy group, which co-ordinates its every move with Isabel dos Santos' father, the president, has already signaled its readiness to negotiate.

40 years after gaining its independence, the power dynamic between Angola and its former colonial ruler Portugal has been all but turned on its head. While the Portuguese used to invest in the African country, it is now Angolan oligarchs, former generals of the liberation army and their offspring, who are buying up profitable companies in Portugal. Ironically, this includes Portuguese banks that have facilitated the rise of Angola's financial elite in the first place.

A merger of BPI and BCP would not only increase the influence of Angola's oil company Sonangol in Portugal, it would also increase Isabel dos Santos' power.

All eyes on on the new bank

Her biggest rival are the Spanish banks, which have been busy leaving their footprint on the Portuguese market, either through shareholders or subsidiaries. Both sides are vying for the country's top bank, which will soon be up for sale: Novo Banco, the "good bank" that survived the collapse of the Espirito Santo empire.

Analysts in Lisbon predict that a medium-sized bank backed by Angolan capital, such as a BPI-BCP merger, would stand a better chance of competing with the Spanish for Novo Banco. They say there's a good chance a successful bid could lead to the creation of a new banking heavyweight in Portugal - a scenario likely to please the ECB.

With the race between the Angolan and Spanish sides heating up, Portugal's once-stolid banking industry is looking more and more like a battlefield. This culminated when Isabel dos Santos publicly accused the Spanish of being too culturally different from the Portuguese.

A Portuguese global-player?

Today, Angolan investors have become an integral part of the daily business in Portugal, securing majority stakes in companies ranging from telecommunications to vineyards.

Since those investors usually have close ties to Angola's president, Portugal's government is eager to keep a lid on the issue. The Portuguese-Angolan Chamber of Commerce has nothing but praise for the excellent and profitable relationship between entrepreneurs from both countries, who, the Chamber says, share deep cultural bonds.

The bank merger proposed by Isabel dos Santos could thus unite the best of both worlds: A major Portuguese financial institution with strong Angolan influence and global ambitions. The question is, if the Spanish will put up with this.

* An earlier version of this article suggested that BES used to be Portugal's biggest bank. We apologise for this mistake. (Ed.).