(New throughout, adds capital increase, details, updates share
LISBON May 15 Banco Espirito Santo,
Portugal's largest listed bank, launched on Thursday a capital
increase of up to 1.045 billion euros, hoping to take advantage
of Portugal's economic recovery after the bank posted a loss in
the first quarter due to impairments for bad loans.
In the rights issue, BES will offer shares at a price of
0.65 euros per share, representing a discount of about 34
percent on Wednesday's closing price.
Shares in BES slumped 5.54 percent on Thursday to close at
1.058 euros a share as investors anticipated the announcement.
Shares also had slumped a day earlier.
"The rights issue will allow BES to further strengthen its
capital ratios, leveraging on its competitive position to take
advantage of the recovery of the Portuguese economy and to
expand its international units," the bank said in a statement.
Portugal's economy has begun a shaky recovery after its debt
crisis and will exit an international bailout on Saturday.
The CMVM market regulator had said on Wednesday that BES had
submitted a plan for a capital increase.
On Thursday, BES also announced a first-quarter net loss of
89.2 million euros, in line with expectations, as impairments
for bad loans weighed on the results.
The bank said the cost of provisions for bad loans rose 47.6
percent to 276 million euros, driven by deleveraging after
Portugal's debt crisis.
Net interest income, the difference between interest charged
on loans and interest paid on deposits, rose 21.7 percent to 270
Analysts surveyed by Reuters had predicted, on average, a
net loss of 88 million euros and net interest income of 274
Portugal emerged from a deep recession in the second quarter
Of 2013, but banks are still struggling in the short term with
the effects of the worst downturn since the 1970s in the
Analysts have said Portugal's banks want to raise capital to
accelerate the repayment of contingent convertible bonds, or
CoCos, to the state. Such expensive financing was extended to
Portugal's banks under the country's bailout.
The head of BES said in February that if there was a need to
raise capital, there was available cash in international
(Reporting By Axel Bugge and Sergio Goncalves; Editing by David