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Portugal: 4.9 bln euro bailout for Banco Espirito Santo

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Portugal: 4.9 bln euro bailout for Banco Espirito Santo
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Portugal has injected 4.9 billion euros into one of the country’s biggest lenders, Banco Espírito Santo (BES), to prevent it collapsing.

Carlos Costa, Governor of the Bank of Portugal, said that BES’ healthy businesses would be spun off into a so-called “good” bank, named Novo Banco, while its toxic assets would be hived off into a “bad” bank.

Costa told a news conference that there had been: “A very high risk of contagion that put into question the stability of the national financial system. The Bank of Portugal decided a measure of resolution, including the establishment of a new bank.”

The setback comes just months after Portugal exited its 78 billion euro bailout from the EU and the IMF.

Euronews correspondent Patricia Cardoso reported from Lisbon: “In the streets there is no panic, people go as usual to the BES branches.”

Cordoso added that the sum “corresponds to 2.6 percent of Portuguese GDP, and this will trigger a deficit this year, if it’s not repaid by the end of the year.”