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Ex-head of crisis-hit Portuguese bank posts 3 mn-euro bail

The former head of Portugal’s crisis-hit Banco Espirito Santo, Ricardo Salgado, facing fraud and money-laundering charges, posted bail of three million euros ($4 million) Tuesday, according to local media.

The reports came two days after the Portuguese government announced it would intervene to salvage the ailing bank, narrowly averting a national disaster and a fresh eurozone crisis by launching a new bank as part of a rescue totally nearly 5.0 billion euros.

Salgado, 70, was arrested on July 24 and indicted for “fraud, breach of trust, forgery and money laundering”.

His former bank had reported record losses last week on top of insolvency for its three holding companies amid allegations of accounting fraud.

Its share price plunged and trading was suspended.

Portugal’s Finance Minister Maria Luis Albuquerque has insisted that those responsible for the financial irregularities behind the Banco Espirito Santo (BES) debacle “should face severe penalties”.

BES is the third-biggest bank in Portugal, playing a role across the economy with major interests in insurance, property, tourism and the health sector.

Under the Portuguese government’s rescue plan announced Sunday, new entity Novo Banco will be given 4.9 billion euros ($6.6 billion) of capital, while BES is left holding its bad assets.

BES will be closed down, the European Commission said, with shareholders and all second-line creditors carrying much of the cost.

Salgado had led BES for 23 years before leaving his post in June.

He was forced from office after the Espirito Santo family lost their controlling stake in the bank after its second rights issue in two years.

Last week, BES reported a first-half loss of 3.57 billion euros, the worst ever in Portugal, sending shivers through financial markets and sparking fears of a resurgence of the eurozone’s debt crisis.