BES Oriente to be integrated into Novo Banco after rescue plan

The Banco Espirito Santo do Oriente (BESOR), created in Macau by Portuguese financial institution Banco Espirito Santo (BES) in 1995, will be integrated into Novo Banco, after Portugal’s central bank put in motion a rescue plan, Radio Macau has reported.
Once Portugal’s largest lender by market value, BES has now been split into two – “a good bank” holding the healthy assets, and “a bad bank” presenting the riskier assets.
The good bank has been named Novo Banco, and will be loaned EUR4.9 billion from what is left of Portugal’s European Union-led bailout fund.
A rescue plan was expected after BES reported last Friday a record loss of EUR3.6 billion from the first half of this year.
Sources in the banking sector told Radio Macau that BES Oriente holds the necessary conditions to be integrated into Novo Banco, and has neither risky assets nor any connection to the Espirito Santo family.
Moreover, BES Oriente will most likely change its name, too. Sources in the financial sector also said that there aren’t any reasons for concern, since BESOR has presented safe indicators for the future.
After regulators uncovered potential losses on loans to other companies tied to Espirito Santo family, BES has been forced to take public money, Bloomberg reported. Bank of Portugal Governor Carlos Costa was seeking to find private investors to inject cash, but later resorted to what he said would be the last choice: using public money.
“The plan carries no risk to public finances or taxpayers,” he said. In a statement, the Finance Ministry said, “Shareholders, subordinated debt holders, as well as board members or former board members directly involved in the more recent events will be called to shoulder the losses incurred by a banking business they failed to adequately oversee. Taxpayers will not be involved.”
Novo Banco will mainly consist of the bank’s core business of taking deposits and lending to house buyers and companies, the BBC reported. However, it remains unclear what will become of the future of the “bad bank.”