Ricardo Salgado is stepping down after 22 years as executive chairman of Portugual’s Banco Espírito Santo (BES) at the end of July, and all family board members will also vacate their posts,
the
Financial Times
reported.
The resignations result from pressure from Portugal’s central bank, which wants to insulate BES from financial difficulties at other Espírito Santo family businesses, the article said.
The family holding company, Espírito Santo Financial Group (ESFG), owns 25% of BES, the
FT
report noted.
No other family members have been nominated for executive posts at BES. Salgado is expected to be elected by shareholders as head of a new non-executive advisory board, where other family members will serve, the
FT
article said.
Sources originally told the
FT
that BES CFO Amílcar Morais Pires, who was viewed as Salgado’s right-hand man, would be the new executive chairman of the bank. But
a subsequent
FT
report said
that Vitor Bento, an economist, would be Salgado’s successor. The later
FT
article said that although ESFG had proposed Pires. “Lisbon bankers said the Bank of Portugal had insisted that BES be placed under new independent management that had no connections with the Espírito Santo family or the previous board.”
The Espírito Santo family has been feuding for months, the report noted. Salgado’s cousin José Maria Ricciardi, who is CEO of Espírito Santo Investment Bank, refused to join the new advisory board after the family rejected Ricciardi’s governance proposals. Ricciardi previously was unsuccessful in an attempt to replace Salgado as head of the group, the
FT
article said.
After Portugal’s central bank ordered an audit, ESFG admitted to “serious accounting irregularities” and an “extremely negative” financial situation at Espírito Santo International, ESFG’s the biggest shareholder and the parent company of the family holdings, the
FT
report said. An unnamed Lisbon-based analyst told the
FT t
hat the family holding company may have a capital shortfall of about €2.5 billion. The family’s non-financial holding company, Rioforte, is expected to make a €1 billion capital increase, the article said. Analysts expect BES to return to profitability in 2015, the report said.
An unnamed Lisbon banker told the
FT:
“The Bank of Portugal wants a clear separation between the executive management of BES and the Espírito Santo family problems. The new consultative body appears to have been created partly as a honourable exit for Mr. Salgado and other family members that will also provide a sense of continuity for the bank’s core shareholders.”
(Source:
Financial Times,
June 30, 2014.)
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