Proposed by Banco De Portugal, the €4.9bn rescue plan includes splitting of BES into ‘bad’ and ‘good’ banks, while protecting depositors and other clients.
Renamed Novo Banco, the bridge bank is expected to include BES’ general activity and assets and would pay senior bondholders, while all toxic loans would be transferred to the bad bank that is owned by all BES shareholders and subordinated creditors.
The capital will be provided by Portugal’s Resolution Fund through a €4.4bn loan from the Portuguese State.
The loan is sexpected to be primarily reimbursed by the proceeds of the sale of assets of the Bridge Bank.
Speaking at a news conference in Lisbon, Portugal central bank governor Carlos Cosa said: "The plan carries no risk to public finances or taxpayers.
"There was an urgent need to adopt a solution to guarantee the protection of deposits and assure the stability of the banking system."
EC said: "The adoption of this resolution measure is adequate to restore confidence in financial stability and to ensure the continuity of services and avoid potential adverse systemic effects.
"The full contribution of shareholders and of subordinated debt holders to the losses of BES will be ensured in accordance with the burden sharing rules set out in the commission’s 2013 Banking Communication."
With presence in four continents and in 25 countries worldwide, BES employs almost 10,000 people and serves all segments of clients, offering a wide range of products and financial services through a diversified network.
The Lisbon-based lender reported a record loss of €3.6bn for the first half of the year while disclosing results on 30 July.
Image: People walk past Banco Espirito Santo that is being rescued through a €4.9b state rescue plan. Photo: courtesy of Romazur.
