Banco Espirito Santo set to be bailed out by state aid package
TROUBLED Portuguese lender Banco Espirito Santo is expected to be split into a “bad” and “good” bank, under a multi-billion euro state rescue plan being hashed out by Lisbon and European authorities, people familiar with the talks said yesterday.
The plan, aimed at saving a bank that had been engulfed by the dramatic fall of the Espirito Santo family’s business empire, included using at least half of the €6bn (£4.8bn) left from Portugal’s recently exited international bailout programme, sources said.
The state bailout money will be used to finance a special bank resolution fund set up by Portugal in 2012 that will in turn inject money into the new Banco Espirito Santo, or BES, “good bank”. BES shares would be delisted under the plan, with shareholders likely to lose their investment. One source said the injection could be of at least €4bn. It was not immediately clear how the bad bank would be handled.
BES suspended its shares from trading on Friday after prices fell 40 per cent. The bank has run into trouble recently, seeing shares plummet as the ability of its parent company to support its debts financially has come under scrutiny.