Portugal's central bank has BAILED OUT &TAKEN OVER Portugal's Largest listed bank: Banco Espirito Santo ....gonna be a crazy week

[link to www.cnbc.com]


Portugal will spend 4.9 billion euros ($6.58 billion) to rescue its largest listed bank, testing the euro zone's resilience to another banking crisis just months after Lisbon exited an international bailout.
The rescue of Banco Espirito Santo, which was unveiled after a frenzied weekend of discussions between Portuguese and European Union officials, comes after weeks of increasingly bad news about the financial state of the lender, particularly its exposure to a cascade of companies headed by its founding Espirito Santo family.

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.

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[link to mobile.bloomberg.com]

Portugal’s central bank took control of Banco Espirito Santo SA, once the country’s largest lender by market value, in a 4.9 billion-euro ($6.6 billion) bailout that will leave junior bondholders with losses.

The Bank of Portugal’s Resolution Fund will move Banco Espirito Santo’s deposit-taking operations and most of its assets to a new company, Novo Banco, which it will own outright. The lender’s shareholders and junior bondholders will be left with the most “problematic” loans, including those to other parts of the Espirito Santo Group, the central bank said in a statement yesterday. The fund will finance the rescue with a Treasury loan to be repaid by Novo Banco’s eventual sale.

“Shareholders, subordinated debt holders as well as board members or former board members directly involved in the more recent events, and not the taxpayers, will be called to shoulder the losses incurred by a banking business they failed to adequately oversee,” the Finance Ministry said in a statement.

Banco Espirito Santo has been forced to take public money after regulators uncovered potential losses on loans to other companies tied to Portugal’s Espirito Santo family and ordered the lender to raise capital. Bank of Portugal Governor Carlos Costa had sought to find private investors to inject the cash, and said government funds would only be a last resort. The Portuguese government has about 6.4 billion euros remaining from its European Union-led bailout in 2011 to fund the capital injection.

Shares of the lender plunged 73 percent in Lisbon last week to 12 euro cents, for a market value of 675 million euros, before the stock was suspended on Aug. 1. Banco Espirito Santo’s 750 million euros of 7.125 percent dated subordinated notes, part of its Tier 2 capital, were at 35.8 cents on the euro on Aug. 1 and its more-junior undated hybrid Tier 1 bonds were at 30 cents on the euro, down from 60 cents on July 30.

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Last Edited by Uncle Fuck Stick on 08/03/2014 08:36 PM

Thread: Italy’s Bonds Decline With Spain’s as Economic Recovery Falters......German correction: $DAX falls 10% from June..GOLD PRICES SPIKE

Portugal ignites EUR doubts
In Portugal, the Banco Espírito Santo (BES) posted its first-half financials, showing a net loss of EUR 3.58 billion. This has pushed the bank below the regulatory minimum capital, and raising new cash would be difficult, as the bank’s shares have lost 70 percent of their value since its capital increase in June.
The bank’s ex-boss was arrested and now the horrible financials have been published. Note that the bank faced its worst moments after the first half period, so the situation could be even worse now. The systemic effects of the bank are largely unknown.
[link to www.tradingfloor.com (secure)]

Portugal will spend 4.9 billion euros (3.9 billion pounds) to rescue its largest listed bank, testing the euro zone's resilience to another banking crisis just months after Lisbon exited an international bailout.

Portugal will soon see street riots!

The CEO of the Espirito Santo mafia family
Thread: The Bigest Bankster in Portugal was arrested today...

There's a Portuguese poster on GLP, Louisport, than doesn't seem interested in posting about Portugal and he's very busy with supporting Russian separatists from Ukraine. Maybe Portugal is going to switch from Euros to Roubles...

No... eventually Portugal will default to Portuguese Escudo. I miss this one. Death to Euro. It had us led to destruction. Germany trully can win by economics and not by force.

Oh... and this may be the first scandal of a row...

No more i will say on this.

Conservatives lose, communists advance in Portugal elections

The biggest proportional advance, though, was that of the Democratic Unity Coalition (CDU), which consists of the Portuguese Communist Party, the Greens and several smaller groups. It got 552,506 votes, or 11.06 percent, an increase of 1.3 percent since the last election in 2009.
[link to peoplesworld.org]

Red revival: why communism is alive and well in crisis-hit Portugal

At recent local elections on September 29, where abstentions stood at a record 47 percent, the CDU — an alliance between the PCP and the Greens, in which the Communists carry much more weight — was, along with the independent candidates, the only political group that gained ground. It earned over 10 percent of the vote (11.1 percent), winning the mayor’s office in 34 municipal governments, six more than four years ago.
[link to elpais.com]

No doubt that Russia has a hand in the rise of communism in Portugal. Even Luisport will agree on that!

[link to mobile.bloomberg.com]
The biggest overhaul to the $19 trillion credit derivatives market in more than a decade will seek to solve flaws that have stopped some contracts paying out as buyers anticipated.
The changes come too late for investors in the junior debt of Banco Espirito Santo SA, whose credit-default swaps were devalued this month when the Portuguese lender was rescued and restructured by the government. Since the contracts are tied to the majority of a company’s debt, if the borrower is reorganized the swaps don’t necessarily stay tied to the securities they’re meant to protect.
Investors will start signing up to convert outstanding trades into new contracts as early as this week after the International Swaps & Derivatives Association rewrote the documentation to address the weaknesses. The biggest impact of the shakeup may be in the cost of swaps tied to subordinated bank bonds like those of Banco Espirito Santo, which will be about 50 percent more than existing contracts, according to Citigroup Inc.
“The fact that the new contract will afford more protection will mean it will cost more as well,”said Sean Boland, a money manager at Cheyne Capital in London, which manages about $6.5 billion. “The past few precedents haven’t been too favorable. It’s extremely positive that as the market environment and regulatory environment changes, the CDS contracts are changing as well.”
Event Triggers
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. They’re used to hedge against losses or speculate on creditworthiness.
As part of ISDA’s overhaul, the list of events triggering payouts is being expanded to include bail-ins, which is when investors are forced to contribute to bank rescues like those at Banco Espirito Santo. The new definitions will also explicitly insure against debt writedowns, bond exchanges or conversions of debt into equity.
The changes will take effect Sept. 22, when investors can choose to exit existing swaps and buy improved contracts on banks and governments. Corporate swaps are less affected and investors have the opportunity to automatically convert trades, according to New York-based ISDA, the group that sets the industry’s standards.

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