Banco Espirito Santo (BES) saw another sharp drop in its share price yesterday, with a fall of 7.69 per cent as the bank tried to speed up reforms to its management structure.
The bank’s shares settled at just €0.442 at the end of trading yesterday, down by nearly 70 per cent from a recent high in April. Shares are now back to levels last seen during the lowest ebb of 2012, before the European Central Bank president Mario Draghi’s crucial intervention late in the summer.
Economist and former Bank of Portugal director Vitor Bento, who had originally been set to become BES chief executive from the end of this month, has now been rushed into the position. Bento replaces Ricardo Salgado, a member of the Espirito Santo finance dynasty.
Joao Moreira Rato, who was formerly head of Portugal’s government debt agency, also takes up his position as chief financial officer (CFO) immediately.
Pedro Passos Coelho, the Prime Minister of Portugal, ruled out a state bailout for the institution over the weekend.
Despite refusing an intervention, Deutsche Bank’s Giles Moec argues that the government would be able to afford a bailout without prompting “massive tension on the sovereign’s financing capacity”.
The government opposition to financial aid for the struggling bank helped to reduce the cost of servicing the country’s public debt, with the 10-year bond yield falling 1.42 per cent to 3.8 per cent. Last week the crisis sent the yield nudging over four per cent.