The BES scandal escalated last night as losses in the first six months of this year were confirmed at €3.6 billion. They are not simply the worst banking losses on record in Portugal – they hint at yet more scandal within the troubled Espírito Santo empire.
As the family are prohibited from having anything more to do with the group’s tangle of businesses, investigators are grappling with an ever-mounting spiral of financial scandals.
In just a two-week period, the Bank of Portugal revealed “there was a negative impact of €1.5 billion” in BES accounts.
Only last month, €120 million was loaned to a family company without passing through the books.
According to a report by Reuters news agency this morning, “in total, €2.1 billion of provisions were taken because of the bank’s exposure to the Espírito Santo Group”.
As BES’ new management under Vítor Bento struggles to put together a recapitalisation plan, the Bank of Portugal has stressed there is no immediate threat to the bank.
“All the necessary conditions are in place for the bank to continue its activities and for the full protection of the rights of depositors,” it said last night.
As Reuters pointed out, the central bank said it would prefer if capital were raised from private sources – but Portugal “does have funds for a public bailout if needed”.
A private investor close to the developments told Reuters that the possibility of raising more private cash still existed – even though shareholders who put in money in June have seen their investments plummet by around 50% – but that for this to go ahead “the market needs to get reassurance that the potential leakage points are known, and there’s not another possible source”.
This is the billion euro question: Have investigators got to the bottom line of the scandal, or is there more to come?
BES losses confirmed at €3.6 billion as new scandals rock the Espírito Santo empire
