Comeback of the bank 'ESPÍRITO SANTO' under the name 'NOVO BANCO'

The banking world can sometimes be ruthless. The slightest mistake, the slightest derailment and the entire economy can collapse. In the image of what happened in the United States, Portugal experienced a significant banking crisis, that required the intervention of the concerned authorities. In this article, we look at the history of Banco Espírito Santo and how the country could address this rather delicate situation.

Banco Espírito Santo growth years

Founded in 1915 by the heirs of José Maria do Espirito Santo e Silva, it has started with the name "Banking House Espírito Santo Silva & Ca". Five years later, it changed it's the name to "Banco Espírito Santo" (BES).
 
During its development in the period between 1937 and 1999, it worked side by side with the "Banco Comercial de Lisboa" with which it extends internationally, including the United States, Angola, United Kingdom, Brazil, Switzerland and France, while removing itself from the Portuguese market. It also created a holding company in Luxembourg.

The history of bankruptcy

In 1986, the bank returned to Portugal and also earned the Spanish market in 1992.
 
The success led to other achievements, BES became the official sponsor of Cristiano Ronaldo in 2007, received 300 million dollars from China Development Bank in 2011 and in 2012 and signed a partnership with Ecobank (a pan banking African group ).
 
But in 2014, between the irregularities in the Luxembourg holding accounts and the sudden departure of CEO Ricardo Salgado, BES was confronted with a loss of 3.57 billion euros.

The New Bank takes the lead

It was decided then to split BES into two parts, one being renamed into a New Bank. The latter has healthy assets of the bank and is under the control of the Resolution of the Portuguese crisis funds. The bank was re-launched with a total capital of 4.9 billion dollars (4.4 came directly from the Portuguese State and the rest from the resolution fund).
 
At the time, it was decided that, since the new bank would be truly operational, it was going to be sold to one of its shareholders, the only restrictive condition that the buyer should not be a former shareholder BES in recent years.

With this approach, the Portuguese State could then recover the loan of EUR 3.9 billion that was made to save this property. In relation to "harmful" assets, this was left in the hands of shareholders held responsible for the situation.
 
Finally, for resale, as  from the French newspaper La Tribune, if the offers were made, the New Bank did not react positively, because it was considered far below the real value. New negotiations are planned for the end of 2015 or early 2016 to restart the sales process.