Portugal issues assurances over Espirito Santo's troubles
- 10 years ago
Worries about the stability of the Espirito Santo business empire have forced Portugal’s government and central bank to issue assurances that the country’s financial system is not at risk.
Concerns were triggered by irregularities at a web of family-run holding companies behind Portugal’s largest listed bank, Banco Espirito Santo.
There are fears about potentially destabilising losses at the bank and other companies linked to the family.
Portugal’s Prime Minister Pedro Passos Coelho stressed that the bank and the Espírito Santo family’s businesses are separate, adding: “It’s very important that Portuguese and foreign investors clearly understand the difference between them and remain calm about the bank and our financial and banking system.”
Under pressure to clarify the situation, the bank issued a statement that it has reserve capital of 2.1 billion euros, and 1.18 billion of loans, securities and other items linked to the Espirito Santo group. Its customers hold another 850 million euros of the group’s debt.
The statement partially steadied market jitters on Friday in Portugal and beyond.
The bank has insisted that it has enough reserves to absorb any losses but there is lingering unease in the financial markets because many questions remain unanswered.
We still do not even know the size of the problems at Espirito Santo International – a vast conglomerate with holdings in banks, hotels and healthcare which now will have to be restructured after an audit found an unspecified “serious financial condition”.
The family said it had overvalued Espirito Santo International assets and failed to recognise losses and debts, but the reasons it got into such a financial mess are unclear.
Concerns were triggered by irregularities at a web of family-run holding companies behind Portugal’s largest listed bank, Banco Espirito Santo.
There are fears about potentially destabilising losses at the bank and other companies linked to the family.
Portugal’s Prime Minister Pedro Passos Coelho stressed that the bank and the Espírito Santo family’s businesses are separate, adding: “It’s very important that Portuguese and foreign investors clearly understand the difference between them and remain calm about the bank and our financial and banking system.”
Under pressure to clarify the situation, the bank issued a statement that it has reserve capital of 2.1 billion euros, and 1.18 billion of loans, securities and other items linked to the Espirito Santo group. Its customers hold another 850 million euros of the group’s debt.
The statement partially steadied market jitters on Friday in Portugal and beyond.
The bank has insisted that it has enough reserves to absorb any losses but there is lingering unease in the financial markets because many questions remain unanswered.
We still do not even know the size of the problems at Espirito Santo International – a vast conglomerate with holdings in banks, hotels and healthcare which now will have to be restructured after an audit found an unspecified “serious financial condition”.
The family said it had overvalued Espirito Santo International assets and failed to recognise losses and debts, but the reasons it got into such a financial mess are unclear.