BES’ €3 billion hole: “the largest loss of any bank in Portugal”

As the trouble-beset Grupo Espírito Santo faces another decisive week, the Portuguese government is reported to be “very worried”. Losses have without doubt exceeded the group’s capital cushion (€2.1 billion), indeed they are predicted to top €3 billion. The next step has to be a rescue package. The question is where will it come from?
Portugal’s central bank announced last night that recapitalisation through the troika’s economic and financial assistance programme is an option.
Reporting on the latest developments, Reuters news agency said the bank maintained that a private solution was still “doable” – but that “at a last resort, if needed, the public recapitalisation line is available… in any case, the solvency of BES and safety of funds entrusted to the bank are guaranteed”.
Tuesday morning began with the news that losses were now feared to be the largest of any bank in Portugal. Expresso online said: “They are 15 times greater than the estimates of analysts: almost €3 billion. All because regulators and auditors have discovered more skeletons in closets.”
The case is now likely to throw up “more criminal consequences” while Espírito Santo International holds a general assembly in Luxembourg today ahead of the financial report due to be presented tomorrow by the new BES boss Vítor Bento.
Meantime, formal complaints by clients of Banque Privée Espirito Santo in Switzerland have been received, alleging “grave accusations” over the abusive use of private funds and unauthorised investments.
Elsewhere, Luanda is reported to have taken temporary control of BESA (BES Angola) with a €3 million cash injection. The idea is that once the Espírito Santo group’s finances are sorted, the money will be repaid.
Discussing ways of raising capital this morning, SIC notícias points to the selloff of the group’s insurance business Tranquilidade and chain of Tivoli hotels.