BES shares slide after report of big loss

LISBON, July 29 Tue Jul 29, 2014 4:48am EDT

LISBON, July 29 (Reuters) - Shares in Portugal's troubled Banco Espirito Santo slumped almost 10 percent on Tuesday after a newspaper reported it was likely to post a huge first-half loss that could wipe out its capital buffer and force a new capital increase.

"The market is jittery awaiting BES results tomorrow and the report about a 3 billion euro potential loss obviously weighed on the shares. The central bank tried to soothe concerns but the market right now only needs information coming from BES," said Albino Oliveira of Fincor brokers in Lisbon.

The Bank of Portugal said late on Monday it believed that BES, the country's largest listed bank by assets, would be able to secure a private capital raising to compensate for any loss beyond its capital buffer of 2.1 billion euros ($2.8 billion).

As a last resort, it said, Portugal still had over 6 billion euros available for banking sector recapitalisation from its international bailout that ended in May.

Expresso newspaper said on Monday BES was likely to report a loss of around 3 billion euros on Wednesday after having to assume additional debt linked to the troubled Espirito Santo group of its founding family.

BES declined to comment on the report.

Three of the Espirito Santo family holding companies, including ESFG, which holds a 20 percent stake in BES, have requested creditor protection this month.

BES already raised 1 billion euros in a capital increase completed on June 11.

BES shares were off 8.1 percent at 0.399 euros at 0830 GMT, not far from an all-time low of 0.36 euros hit earlier in July.

"The challenges facing BES to remain privately owned continue to mount as the prospect of state aid and sub debt burden sharing draws nearer in our view, following the apparent emergence of additional intra-group exposures," said Ciara Callaghan of Merrion Stockbrokers.

Problems have been escalating for the family that founded the bank more than a century ago. Earlier this year, accounting irregularities were identified in one of its holdings.

($1 = 0.7444 Euros) (Reporting by Andrei Khalip; Editing by Mark Potter)

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