Stricken Portuguese bank Banco Espirito Santo announced on Wednesday historic losses of 3.57 billion euros ($4.78 billion) in the first half of the year due to exposure to the debts of its holding company.
The result, the largest ever loss of any bank in Portugal, had been widely anticipated by investors worried about the impact of the financial woes of BES’s parent Espirito Santo Group.
The poor performance contrasts with a loss of 237 million euros in the first semester of 2013.
Portugal’s biggest private bank also announced provisions for bad debts and unforseen costs worth 4.25 billion euros. BES revised its direct exposure to Espirito Santo’s debt upwards to 1.57 billion euros, including insurance costs.
It had previously said it was exposed to 1.2 billion euros of its parent group’s liabilities.
The difficulties in the Espirito Santo group of companies surfaced earlier this year, denting confidence in Portugal’s future after it exited a 78 billion euro EU-IMF debt rescue programme.
Last week, former BES head Ricardo Salgado was arrested in connection with money laundering following a massive probe dating back to 2011.
He was forced out as head of BES after 23 years last month amid allegations of accounting irregularities at one of the bank’s Luxembourg-based holding companies.