BES Rises as Goldman Sachs, D.E. Shaw Buy Stake: Lisbon Mover

Jul 23, 2014 11:34 am ET

July 23 (Bloomberg) -- Banco Espirito Santo SA, which has slumped since disclosing accounting irregularities at an affiliated company, rose the most in a week after Goldman Sachs Group Inc. and D.E. Shaw & Co. bought stakes in the bank.

Portugal’s second-biggest bank by market value increased as much as 20 percent to 50 euro cents and traded at 47.9 euro cents as of 4:29 p.m. in Lisbon trading.

Goldman Sachs holds a 2.8 percent stake in Banco Espirito Santo after acquisitions July 15 and D.E. Shaw, a New York-based hedge-fund firm, owns 2.7 percent of the stock as of July 14, according to separate regulatory filings from Banco Espirito Santo yesterday after the market close.

Goldman Sachs said today that it “entered into positions in Banco Espirito Santo by virtue of its facilitation of client transactions,” according to an e-mail sent to Bloomberg News.

“This purchase passes on some security to the market and can open the door for other institutional investors,” said Juan Dieste, a trader at Orey iTrade in Lisbon.

Banco Espirito Santo will probably raise private funds to boost capital, Bank of Portugal Governor Carlos Costa said July 18, saying talks with investment banks and investors indicate interest in the lender. The bank has lost about half its market value since disclosing May 20 that there were “irregularities in the accounts” of a related company, Espirito Santo International.

Costa has also tried to reassure depositors and investors that Banco Espirito Santo can withstand any losses that may result from Grupo Espirito Santo, which indirectly controls a 20 percent stake in the bank. The concern stems from two companies within that group missing payments on commercial paper.

Banco Espirito Santo has hired Deutsche Bank AG to provide advice on how to strengthen its balance sheet, the bank said in a regulatory filing yesterday.