LISBON: Troubled lender Banco Espirito Santo is to be rescued by the Portuguese government in a €4.9bn (£3.9bn) plan that will split the private institution into “good” and “bad” banks.
Carlos Costa, the central bank Governor, said: “There was an urgent need to adopt a solution to guarantee the protection of deposits and assure the stability of the banking system.” His comments come amid fears of a run on the bank and worries about contagion spreading to the country’s fragile economy and the eurozone. The country only exited a €77bn EU-IMF rescue programme in May.
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The money will come mostly from the €6bn (£4.8bn) left from Portugal’s recently exited international bail-out programme. It will be used to inject €4.9bn, via the bank resolution fund, into the new “good” institution – “Novo Banco – which will eventually be sold. The cash injection from the state is designed to stop savers pulling any more money out of the bank, and to assure them their money is safe, analysts said.
