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BES shares plummet 50pc as bank seeks new capital after huge loss
LISBON, July 31 (Reuters) - Shares in Portugal''s Banco
Espirito Santo nosedived 48 percent on Thursday to hit record
lows after the bank booked a massive 3.6 billion euro first-half
loss, vowed to raise new cash and gave details of irregularities
in its dealings with companies related to its founding family.
Trading in BES shares started at 0914 GMT after a two-hour
suspension imposed by CMVM market watchdog to give investors
more time to analyse the information provided by the bank on
Wednesday night. Earlier, both Portugal's CMVM and London's FCA
market watchdogs imposed a one-day short-selling ban on BES
whose shares fell more than 10 percent on Wednesday. They were
down 50 percent at 0918 GMT.
The bank's losses - whichprompted it to say it would
immediately begin a process to raise an undisclosed amount of
additional capital - came as BES's new management team sought to
draw a line under a torrid few months dominated by fears about
the bank's exposure to thetroubled business empire of the
Espirito Santo family. [ID:nL6N0Q56WL]
Bank of Portugal announced top officials in BES's risk
management, compliance, supervision and internal audit functions
were being suspended over suspected "harmful management"
contributing to the bumper losses. The bank said laws may have
been broken, and vowed to investigate. [ID:nL6N0Q56WL]
Citi analyst Stefan Nedialkov, who''s target price of 36c for
the bank is a shade above Wednesday''s closing price of 34.7c,
told clients that despite a huge "cleanup loss" exceeding Citi''s
estimates there were still risks that state support could be
needed to boost solvency ratios, as well as of further
undiscovered losses.
"Bank of Portugal and BES'' new CEO havecommented that
private investors are willing to step in. But would the state
and/or junior bondholders have to get involved? Non-dilutive
state support at a reasonable cost would produce a more
favourable outcome for existing shareholders but the fate of
junior bondholders remains uncertain," he wrote.
LISBON, July 31 (Reuters) - Shares in Portugal''s Banco
Espirito Santo nosedived 48 percent on Thursday to hit record
lows after the bank booked a massive 3.6 billion euro first-half
loss, vowed to raise new cash and gave details of irregularities
in its dealings with companies related to its founding family.
Trading in BES shares started at 0914 GMT after a two-hour
suspension imposed by CMVM market watchdog to give investors
more time to analyse the information provided by the bank on
Wednesday night. Earlier, both Portugal's CMVM and London's FCA
market watchdogs imposed a one-day short-selling ban on BES
whose shares fell more than 10 percent on Wednesday. They were
down 50 percent at 0918 GMT.
The bank's losses - whichprompted it to say it would
immediately begin a process to raise an undisclosed amount of
additional capital - came as BES's new management team sought to
draw a line under a torrid few months dominated by fears about
the bank's exposure to thetroubled business empire of the
Espirito Santo family. [ID:nL6N0Q56WL]
Bank of Portugal announced top officials in BES's risk
management, compliance, supervision and internal audit functions
were being suspended over suspected "harmful management"
contributing to the bumper losses. The bank said laws may have
been broken, and vowed to investigate. [ID:nL6N0Q56WL]
Citi analyst Stefan Nedialkov, who''s target price of 36c for
the bank is a shade above Wednesday''s closing price of 34.7c,
told clients that despite a huge "cleanup loss" exceeding Citi''s
estimates there were still risks that state support could be
needed to boost solvency ratios, as well as of further
undiscovered losses.
"Bank of Portugal and BES'' new CEO havecommented that
private investors are willing to step in. But would the state
and/or junior bondholders have to get involved? Non-dilutive
state support at a reasonable cost would produce a more
favourable outcome for existing shareholders but the fate of
junior bondholders remains uncertain," he wrote.
