Banco Espírito Santo’s stake in BES Angola (BESA) will placed among assets of the so-called ‘bad bank’ following the Portuguese financial institution’s split into two banks, a ‘good’ one and a ‘bad’ one, the governor of the Bank of Portugal announced on Sunday in Lisbon.
Carlos Costa said that Banco Espírito Santo (BES) would be divided into Novo Banco, which will take in all good quality deposits and credit along with BESI and Banco Best, and the bad bank which will continue with the BES name and include, besides BESA, all toxic assets from the Grupo Espírito Santo (GES).
Novo Banco’s shareholder is the resolution fund headed by the Bank of Portugal, which will inject 4.9 billion euros in the institution. The BES or bad bank will continue to be owned by BES’s current shareholders, who will lose everything, as will holders of subordinated bonds.
The ‘bad bank’ will enter liquidation and thereafter be managed by a bankruptcy administrator.
Costa said the Portuguese government and the supervisor made this decision because it was no longer possible to keep the same BES with the doors open, as it had lost access to loans from the European Central Bank following the results it presented in the first half-year.
All employees of BES along with all its branches will shift to Novo Banco, along with the deposits, credit clients and senior bondholders.
“Most activity and property of Banco Espírito Santo is immediately and definitively transferred to Novo Banco, duly capitalised and purged of problem assets. Deposits are fully preserved, as well as all non-subordinated bonds,” the Bank of Portugal also indicated. (macauhub/AO/PT)