Portugal to give $6.58 billion to save Banco Espirito SantoStaff writer ▼ | August 4, 2014
The European Commission said on that Portugal's planned $6.58 billion rescue of Banco Espirito Santo (BES) was in line with EU state aid rules.
BES EU gives green light to Portugal
The Commission said a disorderly resolution of BES could have created a serious disturbance in the Portugues economy and that the creation of a temporary credit institution, holding deposits, senior debt and most of the assets, was a suitable remedy.
To limit market distortions, the latter's new business would be limited, it said.
Under the plan, Banco Espirito Santo, or BES, will be split into a "good bank", renamed Novo Banco, and a "bad bank", which will house BES's exposures to the troubled Espirito Santo business empire, which last week tipped the bank in to a record 3.6 billion euros loss.
The bad bank's losses will be born by the bank's junior bondholders and shareholders, including the Espirito Santo family, which has a 20 percent stake, and French bank Credit Agricole (>> CREDIT AGRICOLE) which owns 14.6 percent. ■