Portugal rescues Banco Espirito Santo with $6.6B

Portugal is spending €4.9B ($6.6B) to rescue Banco Espirito Santo, splitting it into a "good bank", to be renamed Novo Banco, and a "bad bank", which will house Banco Espirito's exposures to the troubled Espirito Santo business empire.

The bad bank's losses will be born by the bank's shareholders, including the Espirito Santo Financial Group (OTC:ESFHF), one of the holding companies of the Espirito Santo family, and French bank Credit Agricole (OTCPK:CRARY) which owns a 14.6% stake.

With total assets of €76.6B ($103B) at the end of March, Banco Espirito Santo is nowhere near large enough to rank among the eurozone’s largest banks. Still, the rescue will be costly for a country that emerged from an international bailout only months ago.

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Comments (14)
  • Matthew Davis
    , contributor
    Comments (4749) | Send Message
    By spending more deficit money on a bank that is insolvent...sounds logical. (not really)
    4 Aug 2014, 02:00 AM Reply Like
  • thomasone
    , contributor
    Comments (134) | Send Message
    stuck with stock here what will happen to stock
    goldman had it at a buy in early july '
    4 Aug 2014, 03:19 AM Reply Like
  • mitrado
    , contributor
    Comments (2033) | Send Message
    You'll be owning stock on the "bad bank."
    How could you buy stocks on a Portuguese Bank anyway? Our stock market is a joke... and Banks are the main Jokers. Our stock market appears to be a Penny Stock Exchange. It's so ridiculous it hurts even to look at it, let alone to invest in it.
    4 Aug 2014, 03:58 AM Reply Like
  • leopardtrader
    , contributor
    Comments (3834) | Send Message
    Common equity holders and subordinated bond holders to be wiped out owning shares in the " bad bank"
    4 Aug 2014, 04:18 AM Reply Like
  • Debutant
    , contributor
    Comments (2993) | Send Message


    I am sorry for your loss.


    This may go down the history as yet another example to the series of GS recommendations to the public when the GS itself probably was on the other side of that trade.
    4 Aug 2014, 04:25 AM Reply Like
  • mitrado
    , contributor
    Comments (2033) | Send Message
    Yeah, Goldman Sachs are crooks. I've been doing the opposite of what they say:


    - Sell Nokia at $2.37 (I bought)
    - Sell Vertex at $30 (I bought)
    - Sell Seadrill at $32 (I bought)
    - Buy Homex at $20 (I sold)


    These are just a few examples I remember because had I followed their suggestions, all these trades would have gone terribly wrong...
    4 Aug 2014, 05:12 AM Reply Like
  • june1234
    , contributor
    Comments (4504) | Send Message
    Thats what Im going to do on my next loan app. This is my good financials, the other is my bad one. Lets just focus on the good one
    4 Aug 2014, 06:54 AM Reply Like
  • littup
    , contributor
    Comments (506) | Send Message
    Just FYI, Depositors in Cypriot Banks lost their deposits. Not their shares.


    It is only reasonable for someone to lose his equity when a bank is wiped out.
    4 Aug 2014, 07:10 AM Reply Like
  • MechEngineer
    , contributor
    Comments (9) | Send Message
    Musical banks
    4 Aug 2014, 08:01 AM Reply Like
  • ValueQ
    , contributor
    Comments (10) | Send Message
    I bought BKESY (Banco Espirito Santo OTC ADRs) after it first dropped 60% in a week. So did Baupost and D.E. Shaw. There was a thesis there. Other stakeholders prevailed and had no incentive to support equity holders. It would be great to hear from others who bought and lost.
    4 Aug 2014, 12:34 PM Reply Like
  • mitrado
    , contributor
    Comments (2033) | Send Message
    Sorry, Leom, but no one in their perfect mind would buy Portuguese shares. Our stock market is a joke. It looks like a Penny Stock Market.
    4 Aug 2014, 02:07 PM Reply Like
  • Robin Hewitt
    , contributor
    Comments (5671) | Send Message
    Espirito Santo (Holy Spirit) is the "bad bank". Shouldn't that be Banco Diabo?
    4 Aug 2014, 01:29 PM Reply Like
  • littup
    , contributor
    Comments (506) | Send Message
    4 Aug 2014, 02:16 PM Reply Like
  • mitrado
    , contributor
    Comments (2033) | Send Message
    littup: In Portuguese, it's Diabo! ;-)
    4 Aug 2014, 07:53 PM Reply Like
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