Portugal’s Novo Banco is set to fall into Chinese hands in a €4bn-plus deal that would be the biggest European financial services acquisition by a China-based group.

The auction of the “good bank” created from the wreckage of Banco Espírito Santo has turned into a shootout between Anbang Insurance and Fosun International, two acquisitive Chinese rivals, according to several people familiar with the situation.

A Fosun or Anbang takeover of Portugal’s third-largest bank by assets at the price of more than €4bn being mooted by bankers would highlight the intensifying pace of Chinese investments across Europe’s struggling financial services industry. A report by Rhodium, a China-focused research group, said that Chinese foreign direct investment into Europe hit $18bn last year, double the 2013 level. It said investment averaged $10bn annually over each of the past four years.