Portugal's largest listed bank Banco Espirito Santo
Lisbon - AFP
Portugal's largest listed bank Banco Espirito Santo (BES), whose shares have plummeted shaking global stock markets, said early Friday its exposure to debt in the Espirito Santo group rose to 1.18 billion euros ($1.6 billion) at the end of June.
"Banco Espirito Santo awaits the publication of the restructuring plan for the Espirito Santo group in order to be able to estimate the potential losses associated with its exposure," the bank said in a statement
Lisbon stock market regulators Thursday suspended trade in Banco Espirito Santo (BES), the country's biggest lender by capitalisation, after its shares plummeted by 17.24 percent to 0.50 euros.
Trading was halted ahead of "important information" to be published by BES, the market regulator had said.
Concerns about the lender, erupting less than two months after Portugal exited a three-year, 78-billion-euro ($106 billion) international bailout, sent shockwaves through Lisbon and other fragile southern European markets.
When stock markets closed, Portugal's PSI index had lost by 4.18 percent, Spain's IBEX-35 index had dropped 1.98 percent, and Italy's FTSE MIB had skidded 1.90 percent.
Major markets across Europe also fell back, and stocks in New York opened lower on the Portugal bank scare but later recovered to end with modest losses.
The Portuguese bank has been hit in particular by suspicion that a holding company, Espirito Santo International (ESI), covered up a 1.3 billion euro hole in the accounts.
"Investors are concerned about the solvability of BES and the impact it could have on the whole country," said Renaud Murail, manager at France-based stock brokerage Barclays Bourse.
BES shares were suspended from trade just hours after its main shareholder Espirito Santo Financial Group voluntarily withdrew its own shares from the market, citing "difficulties" at ESI.
Espirito Santo Financial Group said it was "assessing the financial impact of its exposure" to the troubled ESI, which is under investigation by Luxembourg authorities and is reportedly seeking to restructure debts estimated at more than seven billion euros.