Portugal's Espírito Santo family is “working on untangling the web of businesses it spun over the decades” in an effort to stop the collapse of its empire,
Bloomberg reported.
Three of the Grupo Espírito Santo holding companies have asked for creditor protection, and patriarch Ricardo Espírito Santo Salgado, who has left his post as Banco Espírito Santo's CEO, was held in an investigation of tax fraud and money laundering, the report noted.
The Espírito Santo family has holdings in property, agriculture, tourism and health in addition to the bank, the article said. Ricardo Cabral, an assistant professor of economics at the University of Madeira, told Bloomberg, “The family eventually lost track of all these different businesses. The group amassed too much debt. It kept on postponing the problems by rolling over debt with short maturities and at high interest rates.”
During the European financial crisis, the family took on more debt instead of raising money from outside investors, which would have diluted their control of the bank, the Bloomberg article said. During the crisis, the Espírito Santo group continued expanding its other holdings.
The Bank of Portugal said it has found evidence of “seriously harmful acts of management” at Banco Espírito Santo, the Bloomberg report said. The bank operates in 25 countries, the article said.
Some of the group's assets are already up for sale, the article noted. The family is selling its part of its Swiss private banking business to CBH Cie. Bancaire Helvétique SA, a Swiss family-owned private bank. Private equity groups and a Portuguese hotel group are interested in the family's Tivoli hotels, the article said. (Source: Bloomberg, Aug. 1m 2014.)
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