Oct. 19 (Bloomberg) -- Banco Espirito Santo SA’s shareholders are willing to keep their stakes in the Portuguese bank as it seeks to raise capital, Chief Executive Officer Ricardo Salgado said.
“Our shareholders are here to stay and are willing to keep their stakes” in the lender, Salgado told reporters today in Lisbon.
Espirito Santo, Portugal’s biggest publicly traded bank, yesterday said it plans to raise as much as 790.7 million euros ($1.1 billion) by exchanging certain securities that will boost its core tier 1 capital ratio, a measure of financial strength, by 147 basis points. It had a ratio of 8.2 percent in June.
Portuguese banks are required to reach a core Tier 1 capital ratio of 9 percent this year and 10 percent in 2012 as part of the country’s bailout package with the European Union and the International Monetary Fund. As part of the plan, 12 billion euros is earmarked for the recapitalization of lenders should it be necessary.
“It’s more interesting for banks to extend their shareholder base, by converting bonds into shares, than having the state as a shareholder,” Salgado said. “The evidence we have of state management of banks is a disaster.”
Lisbon-based Espirito Santo has put up for sale its international loans to companies and projects to reduce its loans-to-deposit ratio to 120 percent by 2014. Salgado said today the bank would come “close” this year to its annual target of selling 2.5 billion euros in loans.
The lender doesn’t have any holdings of sovereign debt other than Portuguese short-term borrowings, Chief Financial Officer Amilcar Morais Pires said. The company has a 100 million-euro potential loss on its holding in Treasury bills, he said.
--Editors: Stephen Taylor, Jon Menon
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