Portuguese bank urged to replace top team quickly
Banco Espirito Santo’s executive committee should be replaced ‘as soon as possible’
Outgoing executive board member José Maria Ricciardi says management team needs to be replaced to bolster confidence. Photograph: Simon Dawson/Bloomberg
Banco Espirito Santo’s outgoing executive board member José Maria Ricciardi said the management at Portugal’s second-biggest bank by market value should be replaced quickly to help bolster confidence in the lender.
“To reinforce the confidence of clients, employees and the general public, I consider it essential that Banco Espirito Santo’s executive committee be replaced as soon as possible by the new team that shareholders and the Bank of Portugal agreed to,” said Mr Ricciardi, who heads the lender’s investment-banking unit and belongs to the bank’s founding family.
TurmoilGerman chancellor Angela Merkel said at the weekend that turmoil in global markets caused by a Portuguese bank underscores the euro region’s fragility. “The example of a Portuguese bank showed us in the last few days how quickly the so-called markets are roiled, how quickly uncertainty returns and how fragile the whole euro construction still is,” Dr Merkel said. She didn’t mention Espirito Santo by name.
Banco Espirito Santo upset markets last week after parent company Espirito Santo International SA missed some payments on commercial paper.
The bank’s stock dropped 36 per cent last week and its credit rating was lowered by both Standard and Poor’s and Moody’s Investors Service .
ProposalEspirito Santo Financial Group, or ESFG, which is controlled by the family and is the biggest shareholder in the bank with a 25 per cent stake, on July 5th said it would propose Vítor Bento as chief executive officer and Joao Moreira Rato as chief financial officer at a July 28th board meeting.
Credit Agricol, which owns 14.6 per cent of Banco Espirito Santo, backs the proposal. Shareholders are due to ratify both as board members on July 31st.
Mr Bento (60), is currently the chairman of payment-processing company SIBS SA. Current chief executive Ricardo Salgado (70), the great- grandson of the bank’s founder, was due to end his term in 2015. Mr Moreira Rato (42) heads Portugal’s government debt agency.
Moody’s Investors Service on Friday said that “the problems detected at the parent company of Banco Espirito Santo and their likely impact on the wider banking system should not have a significant impact on the sovereign’s credit metrics and the macroeconomic fundamentals of the country.” – (Bloomberg)