News Column

Concern in Portugal as Banco Espirito Santo share sales suspended

July 10, 2014

Lisbon (Alliance News) - Shares in Portugal's largest private bank Banco Espirito Santo plunged Thursday before trading was halted as its parent company said it had missed some debt payments.

The bank's largest shareholder ESFG (Espirito Santo Financial Group) asked that the share sales be suspended.

Espirito Santo International is the biggest shareholder of Espirito Santo Financial Group, which in turn owns 25% of BES.

There is also power struggle within the bank's founding family over who should succeed longtime bank head Ricardo Salgado. Shareholders are to select a new bank head on July 31.

The turmoil within the bank has created concerns in Portugal's capital markets and government bonds remain under stress.

The interest rate that the state must pay on a 10-year bond rose approximately 4%, to the highest rate in three months.

Portugal left an EU bailout programme in May.

"The Portuguese banking system has been able to endure the crisis without significant disruption, aided by substantial public capital support and extraordinary measures from the ECB," the International Monetary Fund said in a statement.

"However, as the Bank of Portugal acknowledges, pockets of vulnerability remain, warranting corrective measures in some cases and intrusive supervision in others. The IMF does not comment on individual financial institutions."

The European Commission said that the Portuguese financial system had been "significantly reinforced in recent years."

"We are confident that any problems in the system will be managed in a timely and efficient manner," said commission spokesman Simon O'Connor.

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Source: Alliance News

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