Espirito Santo Shares Drop on New Stock Sale Plan: Lisbon Mover

Banco Espirito Santo SA (BES), Portugal’s biggest publicly traded bank, slumped the most in four months in Lisbon trading after announcing a plan to sell as much as 1.01 billion euros ($1.3 billion) of new stock.

The shares fell almost 11 percent to 1.04 euros in the Portuguese capital, giving the lender a market value of 1.53 billion euros.

Espirito Santo, based in Lisbon, said yesterday after the close of trading that it will offer 2.56 billion shares to existing shareholders at a subscription price of 39.5 cents each. The stock price closed yesterday at 1.167 euros.

The rights offer will allow the bank to buy out its partner in an insurance unit and to increase its core Tier 1 capital ratio to 10.75 percent from 9.21 percent. Espirito Santo said it also agreed to buy 50 percent of the BES Vida insurance unit from Credit Agricole SA (ACA) for 225 million euros.

Holders of 50.6 percent of the bank’s stock have indicated they intend to exercise their subscription rights in the capital increase, according to the company. A group of investment banks have agreed to seek subscribers or subscribe themselves to new shares representing as much as 49.4 percent of the offering, the lender said.

Espirito Santo Financial Group SA (ESF), the parent company of Banco Espirito Santo, said today it plans to raise as much as 400 million euros by selling new shares to strengthen its core Tier 1 capital and to take part in the bank’s capital increase. Its stock fell 1.2 percent to 5.14 euros in Lisbon.

Banco Comercial Portugues SA (BCP), Portugal’s second-biggest bank, fell 6.5 percent to 11.6 cents.

To contact the reporter on this story: Joao Lima in Lisbon at jlima1@bloomberg.net

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net

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