Obbligazioni societarie La saga della famiglia Espírito Santo: cosa succederà alle obbligazioni BES ed ESFG? (3 lettori)
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negusneg
New Member
Espirito Santo Offer Documents Said Reviewed by Regulator
By Anabela Reis and Elisa Martinuzzi - Aug 8, 2014
Portugal’s securities regulator is reviewing whether financial information used to prepare Banco Espirito Santo SA’s share-sale prospectus two months before the lender’s collapse was truthful, according to a person with direct knowledge of the inquiry.
The regulator is looking at documents describing Banco Espirito Santo’s finances as part of a preliminary inquiry into the rights offering, said the person, who requested anonymity because the probe is private.
Banco Espirito Santo, once Portugal’s biggest publicly traded lender by market value, raised 1.04 billion euros ($1.4 billion) from investors in June even as it warned of “material irregularities” in a parent company’s accounts. Investors who bought stock in the offering -- managed by Banco Espirito Santo’s investment-banking unit, Morgan Stanley (MS) and UBS AG (UBSN) -- relied on the offer document for details on the firm’s finances. Shareholders have since been wiped out.
Banco Espirito Santo was split in two with deposits and healthy assets becoming Novo Banco in a bailout by the central bank’s Resolution Fund announced Aug. 3.
Bank of Portugal officials weren’t immediately available for comment. BES Investimento, Morgan Stanley and UBS were so-called global coordinators of the share sale, while KPMG was the company’s auditor. Officials at the companies declined to comment.
The banks that managed the rights offering haven’t been accused of any wrongdoing and aren’t under investigation.
‘Critical Judgment’
A probe into Banco Espirito Santo’s rights offer may ensnare the advisers that prepared the capital increase, including the investment banks, said Joana Gomes, a partner at Caiado Guerreiro e Associados who specializes in commercial and corporate law.
Information relating to public offers of securities should be comprehensive, true, current, clear, objective and lawful, according to Portugal’s securities rules. If the information used to draft the prospectus is proven to be untruthful, intermediaries that assisted with the offer, members of the company’s management and auditors can be found liable, according to the rules.
“I would expect them (the banks) to have a critical judgment” of the information they receive, Gomes said.
Banco Espirito Santo was bailed out after it disclosed potential losses on loans to other Grupo Espirito Santo companies and regulators ordered the lender to raise more capital.
Creditor Protection
Portugal’s Securities Market Commission was under “enormous pressures to approve the prospectus quickly,” Carlos Tavares, the chairman of the regulator, known as CMVM, said in parliament July 24. The bank’s advisers told the Lisbon-based watchdog that “if it wasn’t approved on a certain date that would be a calamity, the whole operation would collapse. That was something we couldn’t accept.”
In its May 20 prospectus, Banco Espirito Santo warned of irregularities in Espirito Santo International SA’s accounts and said the “serious financial situation” at that parent company could be damaging to the bank’s reputation.
The bank said its biggest shareholder, Espirito Santo Financial Group SA, indirectly controlled by ESI, had implemented measures to safeguard potential situations of default that could have an effect on Banco Espirito Santo.
Espirito Santo International sought creditor protection on July 18 and Rioforte, which indirectly owns 49 percent of ESFG, followed with a similar request July 22. ESFG also said that its Portuguese unit had filed for insolvency and that another of its fully-owned subsidiaries had sought creditor protection.
Forensic Audit
Banco Espirito Santo reported a 3.6 billion-euro first-half net loss on July 30 after setting aside 4.25 billion euros to cover souring loans to other members of the group linked to the Espirito Santo family.
The central bank said there were indications of “seriously harmful acts of management” at the lender and a failure to comply with the central bank’s directives. It said it’s reviewing the actions of various individuals, including Ricardo Salgado, 70, who was replaced by Vitor Bento, 60, as chief executive officer last month.
In an Aug. 4 statement, Salgado said he wouldn’t comment until he sees the results of the Bank of Portugal’s forensic audit.
Investigations related to Grupo Espirito Santo were ongoing, the Portuguese Prosecutor General’s Office said in a July 18 e-mail, while declining to provide more details.
To contact the reporters on this story: Anabela Reis in Lisbon at [email protected]; Elisa Martinuzzi in Milan at [email protected]
To contact the editors responsible for this story: Edward Evans at [email protected]; Jerrold Colten at [email protected] Steven Crabill, Christine Harper
By Anabela Reis and Elisa Martinuzzi - Aug 8, 2014
Portugal’s securities regulator is reviewing whether financial information used to prepare Banco Espirito Santo SA’s share-sale prospectus two months before the lender’s collapse was truthful, according to a person with direct knowledge of the inquiry.
The regulator is looking at documents describing Banco Espirito Santo’s finances as part of a preliminary inquiry into the rights offering, said the person, who requested anonymity because the probe is private.
Banco Espirito Santo, once Portugal’s biggest publicly traded lender by market value, raised 1.04 billion euros ($1.4 billion) from investors in June even as it warned of “material irregularities” in a parent company’s accounts. Investors who bought stock in the offering -- managed by Banco Espirito Santo’s investment-banking unit, Morgan Stanley (MS) and UBS AG (UBSN) -- relied on the offer document for details on the firm’s finances. Shareholders have since been wiped out.
Banco Espirito Santo was split in two with deposits and healthy assets becoming Novo Banco in a bailout by the central bank’s Resolution Fund announced Aug. 3.
Bank of Portugal officials weren’t immediately available for comment. BES Investimento, Morgan Stanley and UBS were so-called global coordinators of the share sale, while KPMG was the company’s auditor. Officials at the companies declined to comment.
The banks that managed the rights offering haven’t been accused of any wrongdoing and aren’t under investigation.
‘Critical Judgment’
A probe into Banco Espirito Santo’s rights offer may ensnare the advisers that prepared the capital increase, including the investment banks, said Joana Gomes, a partner at Caiado Guerreiro e Associados who specializes in commercial and corporate law.
Information relating to public offers of securities should be comprehensive, true, current, clear, objective and lawful, according to Portugal’s securities rules. If the information used to draft the prospectus is proven to be untruthful, intermediaries that assisted with the offer, members of the company’s management and auditors can be found liable, according to the rules.
“I would expect them (the banks) to have a critical judgment” of the information they receive, Gomes said.
Banco Espirito Santo was bailed out after it disclosed potential losses on loans to other Grupo Espirito Santo companies and regulators ordered the lender to raise more capital.
Creditor Protection
Portugal’s Securities Market Commission was under “enormous pressures to approve the prospectus quickly,” Carlos Tavares, the chairman of the regulator, known as CMVM, said in parliament July 24. The bank’s advisers told the Lisbon-based watchdog that “if it wasn’t approved on a certain date that would be a calamity, the whole operation would collapse. That was something we couldn’t accept.”
In its May 20 prospectus, Banco Espirito Santo warned of irregularities in Espirito Santo International SA’s accounts and said the “serious financial situation” at that parent company could be damaging to the bank’s reputation.
The bank said its biggest shareholder, Espirito Santo Financial Group SA, indirectly controlled by ESI, had implemented measures to safeguard potential situations of default that could have an effect on Banco Espirito Santo.
Espirito Santo International sought creditor protection on July 18 and Rioforte, which indirectly owns 49 percent of ESFG, followed with a similar request July 22. ESFG also said that its Portuguese unit had filed for insolvency and that another of its fully-owned subsidiaries had sought creditor protection.
Forensic Audit
Banco Espirito Santo reported a 3.6 billion-euro first-half net loss on July 30 after setting aside 4.25 billion euros to cover souring loans to other members of the group linked to the Espirito Santo family.
The central bank said there were indications of “seriously harmful acts of management” at the lender and a failure to comply with the central bank’s directives. It said it’s reviewing the actions of various individuals, including Ricardo Salgado, 70, who was replaced by Vitor Bento, 60, as chief executive officer last month.
In an Aug. 4 statement, Salgado said he wouldn’t comment until he sees the results of the Bank of Portugal’s forensic audit.
Investigations related to Grupo Espirito Santo were ongoing, the Portuguese Prosecutor General’s Office said in a July 18 e-mail, while declining to provide more details.
To contact the reporters on this story: Anabela Reis in Lisbon at [email protected]; Elisa Martinuzzi in Milan at [email protected]
To contact the editors responsible for this story: Edward Evans at [email protected]; Jerrold Colten at [email protected] Steven Crabill, Christine Harper
tommy271
Forumer storico
PDVSA switches to China Citic Bank from Portugal's BES -document
SAN ANTONIO Fri Aug 8, 2014 5:05pm EDT
Aug 8 (Reuters) - Venezuela's state-run oil company PDVSA has started using China Citic Bank to collect money from crude and fuel sales instead of Portugal's Banco Espirito Santo, according to a company document seen by Reuters on Friday.
PDVSA told buyers this week that payments can still be made in dollars or euros. Every payment used to be made at its accounts with Banco Espirito Santo, which Portugal said this month it would rescue because of financial woes.
PDVSA's move comes as Venezuela tries to lift exports of crude and products to China to 1 million barrels per day (bpd), part of broader oil-for-loan deals that have allowed the South American country to receive more than $40 billion in credits since 2007.
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L'aria che tira tra la clientela ...
SAN ANTONIO Fri Aug 8, 2014 5:05pm EDT
Aug 8 (Reuters) - Venezuela's state-run oil company PDVSA has started using China Citic Bank to collect money from crude and fuel sales instead of Portugal's Banco Espirito Santo, according to a company document seen by Reuters on Friday.
PDVSA told buyers this week that payments can still be made in dollars or euros. Every payment used to be made at its accounts with Banco Espirito Santo, which Portugal said this month it would rescue because of financial woes.
PDVSA's move comes as Venezuela tries to lift exports of crude and products to China to 1 million barrels per day (bpd), part of broader oil-for-loan deals that have allowed the South American country to receive more than $40 billion in credits since 2007.
***
L'aria che tira tra la clientela ...
Topgun1976
Guest
Lunedi si verifica,ma quote time 8/8 ,e le Pdn mi pare scambi
negusneg
New Member
- rischi reputazionali: come reagiranno i clienti della banca, dopo l'escalation di (pessime) notizie delle ultime settimane? Vedo che siamo rimasti choccati noi, che bene o male ne abbiamo già vissute parecchie, come reagirà la famosa casalinga di Coimbra?
azzzz, questo doveva essere un bel clientino, altroché la casalinga di Coimbra...
Topgun1976
Guest
It has been a painful few weeks for holders of Banco Espirito Santo BES.LB -40.30%‘s junior debt.
BES’s €750-million ($1 billion) junior bonds due 2023 were quoted at about 111% of face value in early June before plunging this week to around 20% of face value after the Portuguese central bank laid out plans to break up the troubled lender, imposing potentially massive losses on junior creditors.
Here’s a rundown of institutional investors that could have been left bruised from their exposure to the bonds, based on the most recently available data, spanning mostly from the end of March to the end of June:
French funds accounted for about a third of institutional holdings, with U.K. funds accounting for just over a quarter, according to data provider Ipreo, which collates fund disclosures from various sources. Portugal accounted for just 0.04% of institutional holdings. In total, institutional investors accounted for about a third of the bonds outstanding, Ipreo data show. The numbers don’t include holdings from investors such as banks.
Now, holdings may have changed since Ipreo gathered the numbers, but its analysis shows that the U.K.’s BlueBay Asset Management and Italy’s Eurizon Capital SGR SpA were the institutional funds with potentially the largest exposure to the bonds.
BlueBay Asset Management owned $31 million of the bonds at the end of March, which would make it the largest institutional holder of the bonds, based on Ipreo data. BlueBay manages more than $66.6 billion of assets. It declined to comment.
Eurizon Capital–a unit of Italian bank Intesa Sanpaolo ISP.MI +1.04%–owned $24 million of the bonds at the end of April. Eurizon oversees around $28 billion of fixed-income assets. Eurizon didn’t immediately respond to a request for comment.
Here are some other funds that could take a hit, based on the most recently available data:
- UBS Global Asset Management (Americas) Inc. held $21.5 million at the end of April. UBS declined to comment.
- Schelcher Prince Gestion SA held $21 million at the end of May.
- Mediolanum Management Funds holds $13 million of the bonds, according to a spokesperson at Mediolanum SpA.
- Financiere de L’Echiquier held $12 million at the end of March.
- Schroder Investment Management Ltd. held $10 million at the end of June.
- Lazard Freres Gestion held $10 million at the end of June.
- GLG Partners held $9 million at the end of June. A spokesperson for GLG declined to comment.
None of the funds apart from UBS, Mediolanum and GLG immediately responded to requests for comment.
Two units related to the Espirito Santo group reduced their exposure to the bonds. Espirito Santo Gestión S.G.I.I.C., S.A. had cut its holdings by about $2 million to $670,000 by the end of June, Ipreo data show. A spokesperson for the fund said it has since sold the remainder of the bonds. Espirito Santo Gestao de Patrimonios SA, or ESAF, had sold all $3 million of the bonds it owned by the end of June. ESAF didn’t immediately respond to a request for comment.
Italy’s Aletti Gestielle and the U.K.’s Legal & General LGEN.LN +0.04% Investment Management were among funds that previously held a relatively large portion of the bonds.
Aletti–a unit of Banco Popolare–held $42 million of the bonds at the end of June, according to Ipreo. Nicolò Bocchin, a fund manager at Aletti said the fund liquidated its position between July 1 and July 3 at an average price close to 94 cents on the euro.
Legal & General owned roughly $17 million of the bonds at the end of April. A spokesperson for the firm said L&G sold all of those bonds at the end of May.
CORRECTION: An earlier version of this post said that Carmignac Gestion holds $27 million of the bonds. They actually hold $2.7 million.
- Chiara Albanese contributed to this article.
Aletti dovrebbe dare un aumento a stò Bocchin
BES’s €750-million ($1 billion) junior bonds due 2023 were quoted at about 111% of face value in early June before plunging this week to around 20% of face value after the Portuguese central bank laid out plans to break up the troubled lender, imposing potentially massive losses on junior creditors.
Here’s a rundown of institutional investors that could have been left bruised from their exposure to the bonds, based on the most recently available data, spanning mostly from the end of March to the end of June:
French funds accounted for about a third of institutional holdings, with U.K. funds accounting for just over a quarter, according to data provider Ipreo, which collates fund disclosures from various sources. Portugal accounted for just 0.04% of institutional holdings. In total, institutional investors accounted for about a third of the bonds outstanding, Ipreo data show. The numbers don’t include holdings from investors such as banks.
Now, holdings may have changed since Ipreo gathered the numbers, but its analysis shows that the U.K.’s BlueBay Asset Management and Italy’s Eurizon Capital SGR SpA were the institutional funds with potentially the largest exposure to the bonds.
BlueBay Asset Management owned $31 million of the bonds at the end of March, which would make it the largest institutional holder of the bonds, based on Ipreo data. BlueBay manages more than $66.6 billion of assets. It declined to comment.
Eurizon Capital–a unit of Italian bank Intesa Sanpaolo ISP.MI +1.04%–owned $24 million of the bonds at the end of April. Eurizon oversees around $28 billion of fixed-income assets. Eurizon didn’t immediately respond to a request for comment.
Here are some other funds that could take a hit, based on the most recently available data:
- UBS Global Asset Management (Americas) Inc. held $21.5 million at the end of April. UBS declined to comment.
- Schelcher Prince Gestion SA held $21 million at the end of May.
- Mediolanum Management Funds holds $13 million of the bonds, according to a spokesperson at Mediolanum SpA.
- Financiere de L’Echiquier held $12 million at the end of March.
- Schroder Investment Management Ltd. held $10 million at the end of June.
- Lazard Freres Gestion held $10 million at the end of June.
- GLG Partners held $9 million at the end of June. A spokesperson for GLG declined to comment.
None of the funds apart from UBS, Mediolanum and GLG immediately responded to requests for comment.
Two units related to the Espirito Santo group reduced their exposure to the bonds. Espirito Santo Gestión S.G.I.I.C., S.A. had cut its holdings by about $2 million to $670,000 by the end of June, Ipreo data show. A spokesperson for the fund said it has since sold the remainder of the bonds. Espirito Santo Gestao de Patrimonios SA, or ESAF, had sold all $3 million of the bonds it owned by the end of June. ESAF didn’t immediately respond to a request for comment.
Italy’s Aletti Gestielle and the U.K.’s Legal & General LGEN.LN +0.04% Investment Management were among funds that previously held a relatively large portion of the bonds.
Aletti–a unit of Banco Popolare–held $42 million of the bonds at the end of June, according to Ipreo. Nicolò Bocchin, a fund manager at Aletti said the fund liquidated its position between July 1 and July 3 at an average price close to 94 cents on the euro.
Legal & General owned roughly $17 million of the bonds at the end of April. A spokesperson for the firm said L&G sold all of those bonds at the end of May.
CORRECTION: An earlier version of this post said that Carmignac Gestion holds $27 million of the bonds. They actually hold $2.7 million.
- Chiara Albanese contributed to this article.
Aletti dovrebbe dare un aumento a stò Bocchin
Ultima modifica di un moderatore:
negusneg
New Member
Manca Carmignac, che però a metà luglio ha venduto tutto intorno a 80.
Cmq la più bella è questa:
Espirito Santo Gestión S.G.I.I.C., S.A. had cut its holdings by about $2 million to $670,000 by the end of June, Ipreo data show. A spokesperson for the fund said it has since sold the remainder of the bonds.
Cmq la più bella è questa:
Espirito Santo Gestión S.G.I.I.C., S.A. had cut its holdings by about $2 million to $670,000 by the end of June, Ipreo data show. A spokesperson for the fund said it has since sold the remainder of the bonds.
Topgun1976
Guest
Hai capito Salgado..
Good evening. Thank you for your presence.
The Board of Directors of Banco de Portugal decided today to apply a resolution measure to Banco Espírito Santo, S.A. The general activity and assets of Banco Espírito Santo, S.A. are transferred to a new bank, called Novo Banco, duly capitalised and clean of problem assets.
I will start by explaining what has brought us to this point. Then I will point out some of the main aspects of this measure and its implications, and finally conclude.
1. Background
It is public knowledge that Banco Espírito Santo, S.A. is facing a serious financial imbalance situation.
On 30 July 2014, Banco Espírito Santo, S.A. published its results for the 1st half of 2014, with losses attaining €3,577 million, almost entirely (€3,488 million) relating to the 2nd quarter of 2014.
These losses largely exceed the foreseeable values in the light of information disclosed until then by Banco Espírito Santo, S.A. and its external auditor. I would like to recall that, on 10 July, Banco Espírito Santo, S.A. released information on the Bank's exposure to entities in Grupo Espírito Santo as at 30 June 2014, amounting to approximately €1,240 million. Based on this information, Banco de Portugal confirmed, in its press release of 11 July, that the capital buffer of Banco Espírito Santo, S.A. - amounting to €2,100 million - was sufficient to accommodate possible negative impacts arising from its exposure to the non-financial arm of Grupo Espírito Santo, without jeopardising its compliance with the required minimum capital ratios.
The deterioration of the results of Banco Espírito Santo, S.A. versus the figure foreseeable about two weeks ago derives from the practice of a series of management acts - that occurred before the appointment of the new members of the Executive Board - seriously detrimental to the interests of Banco Espírito Santo, S.A. and overtly non-compliant with the determinations issued by Banco de Portugal.
In the second fortnight of July, the external auditor identified the following operations:
(a) The issue of two comfort letters addressed to non-resident institutional investors, in breach of the internal procedures for the approval of this type of operation, which led to the recognition of a loss in the accounts of Banco Espírito Santo, S.A. amounting to €267 million, as at 30 June 2014;
(b) The placement of securities, involving Banco Espírito Santo, S.A., Grupo Espírito Santo and Eurofin Securities, which led to losses in the accounts of Banco Espírito Santo, S.A. amounting to €1,249 million, as at 30 June 2014.
These operations had a negative impact of approximately €1,500 million in the profit and loss account for the 1st half year. I would like to stress that the acts in question were not reported to Banco de Portugal by any member of the management or supervisory boards of Banco Espírito Santo, S.A. on the date they occurred.
As already published by Banco de Portugal, the assessment of individual responsibilities, including those of the former Chief Executive Officer, the former Chief Financial Officer and other members of the Executive Board who have resigned in the interim from their posts, will take place in the context of the on-going forensic audit commissioned by Banco de Portugal. Should the practice of illicit acts be confirmed, the relevant administrative and criminal actions will be pursued.
In this context, in the last few days, the situation of Banco Espírito Santo, S.A. deteriorated rapidly and significantly
The magnitude of the losses and their nature had several adverse consequences:
(i) Banco Espírito Santo, S.A. ceased to comply with the minimum capital ratios in force, with a 5% CET1 ratio, i.e. 3 percentage points below the regulatory minimum.
(ii) On 1 August, the Governing Council of the European Central Bank decided to suspend access by Banco Espírito Santo, S.A. to monetary policy operations, with effect from 4 August.
(iii) Public perception regarding the bank deteriorated markedly, leading to a very significant fall in the quotation of its shares to around 12 cents, culminating in the suspension of transactions by the Portuguese Securities Market Commission on Friday afternoon, 1 August.
(iv) Also on Friday 1 August the Canadian rating agency DBRS cut the rating of Banco Espírito Santo, S.A. and indicated the possibility of further rating cuts;
(v) The evidence of control failure and harmful mismanagement in the Bank has aggravated uncertainty about the balance sheet of Banco Espírito Santo, S.A., making unfeasible a private capitalisation solution in the short run.
These facts placed Banco Espírito Santo, S.A. in a situation of serious and severe risk of not meeting, in the short run, its commitments and, as a result, its authorisation requirements.
Considering the importance of Banco Espírito Santo, S.A. in the banking system and in the financing to the Portuguese economy, the risk of cessation of payments or failure to meet its obligations carries high risk of contagion, compromising the stability of the national financial system.
It is therefore imperative and urgent to adopt a solution that simultaneously: 1) guarantees deposit protection; and 2) ensures financial system stability.
2. Resolution measure applied to Banco Espírito Santo, S.A.
Banco de Portugal, in articulation with the European authorities and taking into account the legal framework in force, decided to apply a resolution measure to Banco Espírito Santo, S.A., which translates into the creation of a new bank to which the essential part of the activity carried on until now by Banco Espírito Santo S.A. is transferred.
Hence, by decision of the Board of Directors of Banco de Portugal, a new bank was created, called Novo Banco, to which most assets and liabilities of Banco Espírito Santo, S.A. are immediately and definitively transferred, as well as its collaborators and other material resources.
Novo Banco will continue to ensure the activity carried on until now by Banco Espírito Santo, S.A. and by its subsidiaries, in Portugal and abroad, thereby protecting its customers and depositors.
From the point of view of the customers of Banco Espírito Santo S.A. and of its subsidiaries' customers, this transfer does not affect in any way the relationship with the bank. The new bank's branches, which for the time being will maintain the brand name and logo of BES, as well as the other telephone and online banking services, will continue their normal operation. Customers will be able to carry out all usual operations under normal conditions, no changes being required.
Thus, and as a consequence of the decision adopted, potential losses for depositors are completely and unequivocally ruled out.
The equity capital of Novo Banco, to the amount of 4,900 million euros, is fully held by the Resolution Fund.
I would like to note that the Resolution Fund's financial resources do not include public funds. The Fund's sources of funding are the initial and periodic contributions of financial institutions and the proceeds from the levy over the banking sector. It is important to stress that the Resolution Fund is an integral part of the European financial stability model.
As the Resolution Fund was only created in 2012, it has not available sufficient financial resources to finance the resolution measure applied to Banco Espírito Santo S.A.. For that reason, the Fund had to take out a temporary loan from the Portuguese State. The loan granted by the State to the Resolution Fund will be temporary, remunerated and substitutable for loans granted by credit institutions.
This means that the resolution measure now decided by Banco de Portugal, contrasting with other solutions adopted in the past, will have no costs for public funds and taxpayers.
The equity capital of Novo Banco will enable a CET1 ratio of 8.5% to be reached at consolidated level, envisaging a margin compared with the minimum capital ratios in force.
The Novo Banco, S.A. is an institution with full access to the liquidity facilities provided by Banco de Portugal, under the Eurosystem framework, having the same funding conditions of the remaining national credit institutions.
- Problem assets or assets to be discontinued are not transferred, notably the liabilities of other Grupo Espírito Santo entities that led to the recently disclosed losses.
- This measure therefore constituted a new level of the ring-fencing process, which has been promoted by Banco de Portugal since the end of 2013, isolating the new bank from the risks associated with Grupo Espírito Santo. These risks remain in the balance sheet of Banco Espírito Santo, S.A. and the current shareholders of Banco Espírito Santo S.A. and its subordinate creditors will be accountable for them.
- By designation of Banco de Portugal, the current members of the board of Banco Espírito Santo S.A. will retain their positions in the new bank and will ensure business continuity. Banco de Portugal considers that this team will guarantee that Novo Banco will be a reference institution at national level and will restore depositors and investors' confidence.
- The board of Novo Banco will promote within an appropriate timeframe and depending on market conditions, the acquisition of significant holdings in the bank by private investors. Banco de Portugal deems that the removal of uncertainty regarding the soundness of the new institution's balance sheet is the most adequate solution to keep the interest that has been shown by investors.
3. Conclusion
During the last week there was a significant deterioration of Banco Espírito Santo, S.A. financial situation and of the uncertainty surrounding it. Due to this situation, a capitalisation solution through private funds became unfeasible.
Under these conditions and given the imminent risk of failure of Banco Espírito Santo S.A. to meet its obligations, Banco de Portugal decided to apply a resolution measure to Banco Espírito Santo S.A., transferring the essential part of its activity to a new bank, duly capitalized and with conditions to carry on its activity without disruption.
The solution adopted by Banco de Portugal had as major concern the preservation of financial system stability and the protection of depositors' interest. The solution adopted is also the best safeguard for the interests of taxpayers and public funds and ensures the maximum accountability of the institution's shareholders.
The new bank has a significant share in the Portuguese financial market. Furthermore, as the risks that led to the recently announced losses have been removed, it has conditions to continue to establish itself successfully in the market and to create value, being an attractive asset for private investors in the near future.
I would like to make a final point, which I consider important to understand the developments of Banco Espírito Santo S.A. during the last year. Grupo Espírito Santo, through the non-financial entities that are not subject to Banco de Portugal supervision, developed a fraudulent funding scheme between the companies belonging to the group. International experience shows that these frauds are very difficult to detect before they collapse, in particular when activities are carried out in various jurisdictions. Banco de Portugal was able to identify a tip of the problem as it conducted an inspection beyond the normal perimeter of supervision, involving an audit to the non-financial companies that are the main customers of the banks - this exercise is known as ETRICC2 (Horizontal Review of Credit Portfolio Impairment). When this tip of the problem was identified, in September de 2013, Banco de Portugal started a ring-fencing policy of Banco Espírito Santo regarding the other companies in the Group. This policy was progressively reinforced over the course of 2013 and due to its tightening Grupo Espírito Santo companies started to default.
Good evening. Thank you for your presence.
The Board of Directors of Banco de Portugal decided today to apply a resolution measure to Banco Espírito Santo, S.A. The general activity and assets of Banco Espírito Santo, S.A. are transferred to a new bank, called Novo Banco, duly capitalised and clean of problem assets.
I will start by explaining what has brought us to this point. Then I will point out some of the main aspects of this measure and its implications, and finally conclude.
1. Background
It is public knowledge that Banco Espírito Santo, S.A. is facing a serious financial imbalance situation.
On 30 July 2014, Banco Espírito Santo, S.A. published its results for the 1st half of 2014, with losses attaining €3,577 million, almost entirely (€3,488 million) relating to the 2nd quarter of 2014.
These losses largely exceed the foreseeable values in the light of information disclosed until then by Banco Espírito Santo, S.A. and its external auditor. I would like to recall that, on 10 July, Banco Espírito Santo, S.A. released information on the Bank's exposure to entities in Grupo Espírito Santo as at 30 June 2014, amounting to approximately €1,240 million. Based on this information, Banco de Portugal confirmed, in its press release of 11 July, that the capital buffer of Banco Espírito Santo, S.A. - amounting to €2,100 million - was sufficient to accommodate possible negative impacts arising from its exposure to the non-financial arm of Grupo Espírito Santo, without jeopardising its compliance with the required minimum capital ratios.
The deterioration of the results of Banco Espírito Santo, S.A. versus the figure foreseeable about two weeks ago derives from the practice of a series of management acts - that occurred before the appointment of the new members of the Executive Board - seriously detrimental to the interests of Banco Espírito Santo, S.A. and overtly non-compliant with the determinations issued by Banco de Portugal.
In the second fortnight of July, the external auditor identified the following operations:
(a) The issue of two comfort letters addressed to non-resident institutional investors, in breach of the internal procedures for the approval of this type of operation, which led to the recognition of a loss in the accounts of Banco Espírito Santo, S.A. amounting to €267 million, as at 30 June 2014;
(b) The placement of securities, involving Banco Espírito Santo, S.A., Grupo Espírito Santo and Eurofin Securities, which led to losses in the accounts of Banco Espírito Santo, S.A. amounting to €1,249 million, as at 30 June 2014.
These operations had a negative impact of approximately €1,500 million in the profit and loss account for the 1st half year. I would like to stress that the acts in question were not reported to Banco de Portugal by any member of the management or supervisory boards of Banco Espírito Santo, S.A. on the date they occurred.
As already published by Banco de Portugal, the assessment of individual responsibilities, including those of the former Chief Executive Officer, the former Chief Financial Officer and other members of the Executive Board who have resigned in the interim from their posts, will take place in the context of the on-going forensic audit commissioned by Banco de Portugal. Should the practice of illicit acts be confirmed, the relevant administrative and criminal actions will be pursued.
In this context, in the last few days, the situation of Banco Espírito Santo, S.A. deteriorated rapidly and significantly
The magnitude of the losses and their nature had several adverse consequences:
(i) Banco Espírito Santo, S.A. ceased to comply with the minimum capital ratios in force, with a 5% CET1 ratio, i.e. 3 percentage points below the regulatory minimum.
(ii) On 1 August, the Governing Council of the European Central Bank decided to suspend access by Banco Espírito Santo, S.A. to monetary policy operations, with effect from 4 August.
(iii) Public perception regarding the bank deteriorated markedly, leading to a very significant fall in the quotation of its shares to around 12 cents, culminating in the suspension of transactions by the Portuguese Securities Market Commission on Friday afternoon, 1 August.
(iv) Also on Friday 1 August the Canadian rating agency DBRS cut the rating of Banco Espírito Santo, S.A. and indicated the possibility of further rating cuts;
(v) The evidence of control failure and harmful mismanagement in the Bank has aggravated uncertainty about the balance sheet of Banco Espírito Santo, S.A., making unfeasible a private capitalisation solution in the short run.
These facts placed Banco Espírito Santo, S.A. in a situation of serious and severe risk of not meeting, in the short run, its commitments and, as a result, its authorisation requirements.
Considering the importance of Banco Espírito Santo, S.A. in the banking system and in the financing to the Portuguese economy, the risk of cessation of payments or failure to meet its obligations carries high risk of contagion, compromising the stability of the national financial system.
It is therefore imperative and urgent to adopt a solution that simultaneously: 1) guarantees deposit protection; and 2) ensures financial system stability.
2. Resolution measure applied to Banco Espírito Santo, S.A.
Banco de Portugal, in articulation with the European authorities and taking into account the legal framework in force, decided to apply a resolution measure to Banco Espírito Santo, S.A., which translates into the creation of a new bank to which the essential part of the activity carried on until now by Banco Espírito Santo S.A. is transferred.
Hence, by decision of the Board of Directors of Banco de Portugal, a new bank was created, called Novo Banco, to which most assets and liabilities of Banco Espírito Santo, S.A. are immediately and definitively transferred, as well as its collaborators and other material resources.
Novo Banco will continue to ensure the activity carried on until now by Banco Espírito Santo, S.A. and by its subsidiaries, in Portugal and abroad, thereby protecting its customers and depositors.
From the point of view of the customers of Banco Espírito Santo S.A. and of its subsidiaries' customers, this transfer does not affect in any way the relationship with the bank. The new bank's branches, which for the time being will maintain the brand name and logo of BES, as well as the other telephone and online banking services, will continue their normal operation. Customers will be able to carry out all usual operations under normal conditions, no changes being required.
Thus, and as a consequence of the decision adopted, potential losses for depositors are completely and unequivocally ruled out.
The equity capital of Novo Banco, to the amount of 4,900 million euros, is fully held by the Resolution Fund.
I would like to note that the Resolution Fund's financial resources do not include public funds. The Fund's sources of funding are the initial and periodic contributions of financial institutions and the proceeds from the levy over the banking sector. It is important to stress that the Resolution Fund is an integral part of the European financial stability model.
As the Resolution Fund was only created in 2012, it has not available sufficient financial resources to finance the resolution measure applied to Banco Espírito Santo S.A.. For that reason, the Fund had to take out a temporary loan from the Portuguese State. The loan granted by the State to the Resolution Fund will be temporary, remunerated and substitutable for loans granted by credit institutions.
This means that the resolution measure now decided by Banco de Portugal, contrasting with other solutions adopted in the past, will have no costs for public funds and taxpayers.
The equity capital of Novo Banco will enable a CET1 ratio of 8.5% to be reached at consolidated level, envisaging a margin compared with the minimum capital ratios in force.
The Novo Banco, S.A. is an institution with full access to the liquidity facilities provided by Banco de Portugal, under the Eurosystem framework, having the same funding conditions of the remaining national credit institutions.
- Problem assets or assets to be discontinued are not transferred, notably the liabilities of other Grupo Espírito Santo entities that led to the recently disclosed losses.
- This measure therefore constituted a new level of the ring-fencing process, which has been promoted by Banco de Portugal since the end of 2013, isolating the new bank from the risks associated with Grupo Espírito Santo. These risks remain in the balance sheet of Banco Espírito Santo, S.A. and the current shareholders of Banco Espírito Santo S.A. and its subordinate creditors will be accountable for them.
- By designation of Banco de Portugal, the current members of the board of Banco Espírito Santo S.A. will retain their positions in the new bank and will ensure business continuity. Banco de Portugal considers that this team will guarantee that Novo Banco will be a reference institution at national level and will restore depositors and investors' confidence.
- The board of Novo Banco will promote within an appropriate timeframe and depending on market conditions, the acquisition of significant holdings in the bank by private investors. Banco de Portugal deems that the removal of uncertainty regarding the soundness of the new institution's balance sheet is the most adequate solution to keep the interest that has been shown by investors.
3. Conclusion
During the last week there was a significant deterioration of Banco Espírito Santo, S.A. financial situation and of the uncertainty surrounding it. Due to this situation, a capitalisation solution through private funds became unfeasible.
Under these conditions and given the imminent risk of failure of Banco Espírito Santo S.A. to meet its obligations, Banco de Portugal decided to apply a resolution measure to Banco Espírito Santo S.A., transferring the essential part of its activity to a new bank, duly capitalized and with conditions to carry on its activity without disruption.
The solution adopted by Banco de Portugal had as major concern the preservation of financial system stability and the protection of depositors' interest. The solution adopted is also the best safeguard for the interests of taxpayers and public funds and ensures the maximum accountability of the institution's shareholders.
The new bank has a significant share in the Portuguese financial market. Furthermore, as the risks that led to the recently announced losses have been removed, it has conditions to continue to establish itself successfully in the market and to create value, being an attractive asset for private investors in the near future.
I would like to make a final point, which I consider important to understand the developments of Banco Espírito Santo S.A. during the last year. Grupo Espírito Santo, through the non-financial entities that are not subject to Banco de Portugal supervision, developed a fraudulent funding scheme between the companies belonging to the group. International experience shows that these frauds are very difficult to detect before they collapse, in particular when activities are carried out in various jurisdictions. Banco de Portugal was able to identify a tip of the problem as it conducted an inspection beyond the normal perimeter of supervision, involving an audit to the non-financial companies that are the main customers of the banks - this exercise is known as ETRICC2 (Horizontal Review of Credit Portfolio Impairment). When this tip of the problem was identified, in September de 2013, Banco de Portugal started a ring-fencing policy of Banco Espírito Santo regarding the other companies in the Group. This policy was progressively reinforced over the course of 2013 and due to its tightening Grupo Espírito Santo companies started to default.
Topgun1976
Guest
African Bank Investments Ltd. (ABL), which plummeted this week after surprising investors with the need for more funding, is counting on shareholders or the government to stave off collapse.
South Africa’s largest supplier of unsecured loans slumped 90 percent since saying on Aug. 6 its chief executive officer and founder resigned, losses will be at a record this year and it requires about $791 million of new capital. The bank has cut funding to its money-losing Ellerines furniture retailer to shore up returns.
“If the top three shareholders get together and will put in the money, calculations show that Abil will survive,” Kokkie Kooyman, the head of Cape Town-based Sanlam Global Investments, which has $900 million under management, said yesterday in a phone interview. “I’m amazed that regulators and auditors didn’t step in earlier and warn of this.”
The speed and magnitude of the decline highlights the prospect of a second banking bailout in less than a week after Portugal’s Banco Espirito Santo SA required about $6.6 billion of government funds following a 73 percent stock plunge. Bank of Portugal Governor Carlos Costa had sought private investors to inject the cash, with government funds being a last resort.
Photographer: Nadine Hutton/Bloomberg
African Bank Investments Ltd., South Africa’s largest supplier of unsecured loans... Read More
The South African Reserve Bank is in talks with Abil, Hlengani Mathebula, an SARB spokesman, said yesterday by phone from Pretoria, without giving more details. There’s “no indications that other South African banks have been affected negatively by Abil’s trading update,” SARB said on Aug. 6.
Shareholder Demands
Public Investment Corp., the South African pension fund that is Abil’s second-largest shareholder, said it will only invest more in the lender if it develops other sources of revenue to become more like a traditional bank and changes its board.
“If we rescue, it will depend on management’s plan, or we’ll be throwing good money after bad,” Chief Investment Officer Daniel Matjila said yesterday by phone. Abil has about a week to finalize a turnaround plan, Johannesburg-based Business Day reported today, citing him.
Abil, which offers loans to individuals who might not be able to obtain them from traditional banks, survived a 2002 crisis among small lenders in South Africa that caused Saambou Holdings Ltd. and Unifer Holdings Ltd. to fail. Bad loans have increased amid rising South African unemployment and inflation.
‘Huge Impact’
“Even if you accept Abil is relatively small in a systemic sense, you have to consider the huge impact on a section of the population that can’t otherwise get funding,” Adenaan Hardien, chief economist at Cadiz Asset Management, said by phone from Cape Town yesterday. “The country can ill afford to cut these people out of the loan market.”
Photographer: Ian Waldie/Bloomberg
South African Finance Minister Nhlanhla Nene said in Pretoria that while the government... Read More
Abil started to falter in March last year after South Africa’s National Credit Regulator said the Johannesburg-based lender had been involved in reckless lending, forcing the bank to abandon plans to raise $300 million in foreign debt markets.
The bank relies on market funding for its business instead of deposits, meaning if it failed there would be no need to compensate angry savers.
Coronation Fund Managers Ltd. (CML) and Stanlib Ltd., are Abil’s two other biggest shareholders. Pieter Koekemoer, head of personal investments at Cape Town-based Coronation, which oversees the equivalent of $54 billion, said in a note to clients yesterday its exposure to African bank is “not material” in any client funds. The asset manager declined to comment beyond the note, while Stanlib declined to comment.
Finance Minister
South African Finance Minister Nhlanhla Nene said in Pretoria that while the government is “keeping an eye” on African Bank, the banking system remains robust and there’s no indication other lenders are affected.
“When the U.S. banks were collapsing in 2008, they went to the Fed and no one left the room until they solved it,” said Kooyman, who has twice been voted fund manager of the year by Investment Week, a British industry publication. “Abil and the Reserve Bank should have done that.”
Much of Abil’s troubles stem from the purchase of furniture retailer Ellerine Holdings in 2008 for 9.2 billion rand ($853 million), a move intended to help the bank find new clients and boost lending. After a series of writedowns and losses, which Abil had to fund by selling debt or equity because it doesn’t take deposits, it tried unsuccessfully to sell the unit.
Ellerine, in a statement late last night, said that there’s a “reasonable prospect” that the the business rescue process will help preserve as many of the company’s 8,000 jobs as possible and help its return to solvency.
“Placing Ellerine into voluntary rescue frees Abil from the need to raise the 1.5 billion rand to 2.5 billion rand equity needed to support it and allows Abil to focus on restructuring its core banking business,” Elena Ilkova, an analyst at Rand Merchant Bank, said in an e-mailed note today. “Attracting 6 billion rand of equity capital to ensure its own survival appears more manageable, especially since Ellerine immediately stops being a cash drain.”
To contact the reporter on this story: Renee Bonorchis in Johannesburg at [email protected]
South Africa’s largest supplier of unsecured loans slumped 90 percent since saying on Aug. 6 its chief executive officer and founder resigned, losses will be at a record this year and it requires about $791 million of new capital. The bank has cut funding to its money-losing Ellerines furniture retailer to shore up returns.
“If the top three shareholders get together and will put in the money, calculations show that Abil will survive,” Kokkie Kooyman, the head of Cape Town-based Sanlam Global Investments, which has $900 million under management, said yesterday in a phone interview. “I’m amazed that regulators and auditors didn’t step in earlier and warn of this.”
The speed and magnitude of the decline highlights the prospect of a second banking bailout in less than a week after Portugal’s Banco Espirito Santo SA required about $6.6 billion of government funds following a 73 percent stock plunge. Bank of Portugal Governor Carlos Costa had sought private investors to inject the cash, with government funds being a last resort.
Photographer: Nadine Hutton/Bloomberg
African Bank Investments Ltd., South Africa’s largest supplier of unsecured loans... Read More
The South African Reserve Bank is in talks with Abil, Hlengani Mathebula, an SARB spokesman, said yesterday by phone from Pretoria, without giving more details. There’s “no indications that other South African banks have been affected negatively by Abil’s trading update,” SARB said on Aug. 6.
Shareholder Demands
Public Investment Corp., the South African pension fund that is Abil’s second-largest shareholder, said it will only invest more in the lender if it develops other sources of revenue to become more like a traditional bank and changes its board.
“If we rescue, it will depend on management’s plan, or we’ll be throwing good money after bad,” Chief Investment Officer Daniel Matjila said yesterday by phone. Abil has about a week to finalize a turnaround plan, Johannesburg-based Business Day reported today, citing him.
Abil, which offers loans to individuals who might not be able to obtain them from traditional banks, survived a 2002 crisis among small lenders in South Africa that caused Saambou Holdings Ltd. and Unifer Holdings Ltd. to fail. Bad loans have increased amid rising South African unemployment and inflation.
‘Huge Impact’
“Even if you accept Abil is relatively small in a systemic sense, you have to consider the huge impact on a section of the population that can’t otherwise get funding,” Adenaan Hardien, chief economist at Cadiz Asset Management, said by phone from Cape Town yesterday. “The country can ill afford to cut these people out of the loan market.”
Photographer: Ian Waldie/Bloomberg
South African Finance Minister Nhlanhla Nene said in Pretoria that while the government... Read More
Abil started to falter in March last year after South Africa’s National Credit Regulator said the Johannesburg-based lender had been involved in reckless lending, forcing the bank to abandon plans to raise $300 million in foreign debt markets.
The bank relies on market funding for its business instead of deposits, meaning if it failed there would be no need to compensate angry savers.
Coronation Fund Managers Ltd. (CML) and Stanlib Ltd., are Abil’s two other biggest shareholders. Pieter Koekemoer, head of personal investments at Cape Town-based Coronation, which oversees the equivalent of $54 billion, said in a note to clients yesterday its exposure to African bank is “not material” in any client funds. The asset manager declined to comment beyond the note, while Stanlib declined to comment.
Finance Minister
South African Finance Minister Nhlanhla Nene said in Pretoria that while the government is “keeping an eye” on African Bank, the banking system remains robust and there’s no indication other lenders are affected.
“When the U.S. banks were collapsing in 2008, they went to the Fed and no one left the room until they solved it,” said Kooyman, who has twice been voted fund manager of the year by Investment Week, a British industry publication. “Abil and the Reserve Bank should have done that.”
Much of Abil’s troubles stem from the purchase of furniture retailer Ellerine Holdings in 2008 for 9.2 billion rand ($853 million), a move intended to help the bank find new clients and boost lending. After a series of writedowns and losses, which Abil had to fund by selling debt or equity because it doesn’t take deposits, it tried unsuccessfully to sell the unit.
Ellerine, in a statement late last night, said that there’s a “reasonable prospect” that the the business rescue process will help preserve as many of the company’s 8,000 jobs as possible and help its return to solvency.
“Placing Ellerine into voluntary rescue frees Abil from the need to raise the 1.5 billion rand to 2.5 billion rand equity needed to support it and allows Abil to focus on restructuring its core banking business,” Elena Ilkova, an analyst at Rand Merchant Bank, said in an e-mailed note today. “Attracting 6 billion rand of equity capital to ensure its own survival appears more manageable, especially since Ellerine immediately stops being a cash drain.”
To contact the reporter on this story: Renee Bonorchis in Johannesburg at [email protected]
moorecat
Nuovo forumer
Banco Espírito Santo: The Angolan Story - Forbes
secondo l'articolo la banca angolana e' controllata dalla cricca al potere (ex comunisti of course...) la maggior parte dei prestiti fatta agli amici degli amici dei suddetti con fondati sospetti di riciclaggio di denaro sporco sempre degli stessi. Ergo la banca centrale angolana - indovinate da chi manovrata - per le superiori esigenze di stabilita' etc etc salverà' il tutto...
secondo l'articolo la banca angolana e' controllata dalla cricca al potere (ex comunisti of course...) la maggior parte dei prestiti fatta agli amici degli amici dei suddetti con fondati sospetti di riciclaggio di denaro sporco sempre degli stessi. Ergo la banca centrale angolana - indovinate da chi manovrata - per le superiori esigenze di stabilita' etc etc salverà' il tutto...
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