1-Aug-14
Espirito Santo Bank shares fell 38 percent, after Thursday, Portugal's central bank ordered banks to raise new capital, and that the former board members could face "bad management" of the legal consequences.
In later issued a statement last Wednesday, the central bank said Portugal BES compliance with minimum capital requirements have been compromised management "serious damage" behavior that is a clear violation of the rules of the central bank. The message is then Portuguese lender reported a net loss for the first half of € 3.58bn.
Shares fell to € 0.218 taking to new historic lows. Because of € 1.04bn capital increase in June bank's share price has fallen more than 70% of the value of percent.
Salgado, BES former Executive Chairman, and other former executive board members will be faced with "the necessary regulatory, and potential criminal consequences", if the "judicial audit" found responsible for any of their respective "illegal act", the Bank of Portugal said.
BES had previously said that "extraordinary events" have led to impairment and emergency expenses in the first half totaled € 4.25bn, and cut its capital strength to below the minimum regulatory requirements.
The central bank suspended "with immediate effect" of all BES board members and "audit, compliance and risk management," as well as the bank's Supervisory Board duties. It appointed an interim board of supervisors by PricewaterhouseCoopers by senior management.
It also prevents the voting rights Espirito Santo Financial Group, with 20% of BES major shareholders. Espiritu Santo in the exposed group's crumbling family business empire ranges BES triggered sell-off concerns, European stock markets this month.
The central bank said that in the second half of July, Best company external auditors to determine the further contact with Espirito Santo Group, in addition to those previously estimated. There are about 1.5 billion € of these additional negative effects, regulators said.
"These facts. Explanation of behavior management practices [that were] seriously damaged the interests of BES and provide a clear infringement of the central bank," the statement said. Facts occurred before the new management team took over the BES July 14, it added.
The results statement, BES said "yes Espirito Santo International (ESI) creditors' family group's parent company board has" learned of the existence of the two letters "issued by the bank.
The letters "have not been approved by the Bank in accordance with internal procedures in place, and not registered in its accounting records," Best said.
Vitor Bento, Best new CEO said that any possible violations of the law, its first half performance "seems to indicate" will be fully investigated.
In the three operators Espirito Santo group, including ESI, has been placed under the control and management after the Luxembourg court for protection from creditors.
The central bank also ordered the BES to raise new capital to ensure its compliance with the minimum solvency ratio, saying it is conducive to "market solutions." However, if necessary, BES can learn from € 64 million from the allocation to help international relief funds left over three banks in Portugal, the statement said.
Mr. Bento, who took over as chief executive officer under the central bank's insistence, said BES immediately to "full capitalization plan" will include capital buffer, while advancing to meet the minimum regulatory requirements.
He said that existing and potential shareholders have expressed an interest in promoting the new capital, adding that some people are willing to buy shares in the bank significantly.
This information comes from Deutsche Bank, was recently appointed to the Government on BES improve its balance sheet, Bento said.
The new management team, which replaced the members of the Espirito Santo family, also prepared a "strategic restructuring plan," which will include an analysis of the potential return on investment, focusing on "international non-strategic assets."
BES said that the first half of obstacles including providing € 12 million to cover its exposure to adverse Espirito Santo Group and the cancellation of the loan granted to its Angolan unit "irreparable interests."
Marks from € 237.4 loss of vertigo in the first half of 2013 fell to record losses, the first six months of this year eliminated the BES existing € 21 billion of capital buffers.
"Special event" Half of the ordinary shares of tier one capital ratio - an important measure of a bank's strength - to 5 percent, less than 7% of the minimum regulatory requirements, BES said.
Excluding one-time special items, BES will be released only the first half net loss of 255.4 m €, said Mr. Bento admitted, "It was a difficult time for all stakeholders."
He added: "We are now focused on taking the necessary steps to sustainable finance bank [base] in the future."
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