BES shares suspended as Espirito Santo subsidiaries fall

The crisis engulfing Portugal’s Espirito Santo Group deepened on Friday, with shares in its stricken Banco Espirito Santo (BES) suspended from trading as two other units filed for bankruptcy.

Espirito Santo Financial Portugal — the bank’s largest shareholder with 20.1 percent — filed for bankruptcy as it was unable to honour its debts, its parent group said.

Minutes earlier, its wholly-owned subsidiary Espirito Santo Financiere filed for bankruptcy in Luxembourg.

The moves come after BES on Wednesday posted a first-half loss of 3.57 billion euros ($4.78 billion), the largest ever reported by a bank in Portugal, dragged down by its exposure to the woes of its parent organisation.

The crisis surrounding the family-owned group has been brewing since trouble in holding companies, now subject to insolvency procedures, emerged in June.

Last week, former BES head Ricardo Salgado was arrested in connection with tax fraud and money laundering, in the latest public disgrace for the famously private family.

On Friday, BES shares plunged more than 40 percent to 0.12 euros before they were suspended, after losing almost half their value the day before.

The bank is now worth less than one billion euros, after losing more than two thirds of its value in the past month.

The slump dragged down Portugal’s financial shares with its broader index ending the day down 3.04 percent at 5,797.67 points.

BES is the biggest private bank in Portugal with interests throughout the economy, and the group’s problems have prompted the government to pledge emergency funding in the event of further financial difficulty.

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