(Adds detail, comment, share price reaction)
By Laura Noonan and Filipa Cunha-Lima
LISBON, July 23 Shares in Banco Espirito Santo
rose as much as 10.5 percent on Wednesday as investors
took heart from a late Tuesday announcement that two major U.S.
institutions had taken a combined 5 percent interest in the
Other Portuguese banks, whose shares suffered in recent
weeks as concerns mounted around BES, also rose strongly, with
Millennium bcp up 5.9 percent at 1210 GMT and Banco
BPI up 3 percent, taking Portugal's PSI20
stock index 1.25 percent higher.
Tuesday night's flurry of Portuguese banking announcements
also included news that Millennium had completed a 2.25 billion
euros ($3.03 billion) capital increase where bids outstripped
the shares on offer by 26 percent.
The other announcements all referred to BES, Portugal's
largest listed bank by assets, which has lost about 50 percent
of its value in the last month as investors fretted about its
exposure to the debts of founding family the Espirito Santo.
After markets closed in Lisbon, BES announced that Goldman
Sachs had taken a 2.27 percent interest in the bank on July 15,
while U.S. hedge fund D.E. Shaw had taken a 2.7 percent stake a
day earlier. The family, which remains the bank's largest
shareholder, sold 4.99 percent of the bank around the same time.
Less than an hour later, one of the founding family
companies, Rioforte, announced it had applied to a Luxembourg
court for protection from its creditors.
Rioforte owes 220 million euros to BES and is a shareholder
in ESFG, which owns 20 percent of the bank.
"BES' rise today reflects mostly the purchase of a stake by
Goldman Sachs ... Rioforte asking for creditor protection has
already been expected," said Albino Oliveira, an analyst Fincor
brokers in Lisbon.
Another family holding company, ESI, announced on Tuesday it
had been successful in its petition for creditor protection
which it filed last week.
Gualter Pacheco, a trader at GoBulling, also said news of
the new investors was driving the BES stock move.
"If Goldman Sachs and DE Shaw buy stakes of more than 2
percent it's because they consider BES' price interesting, they
think that BES will overcome its difficulties and it's also a
very positive signal for other investor interest," he said.
Caixa Banco de Investimento banking analyst Andre Rodrigues
said Millennium's capital increase was "positive news" and
changed his rating on the stock to "buy" from "accumulate".
($1 = 0.7427 Euros)
(Addtional reporting by Patricia Rua; Editing by Erica
Billingham and Mark Potter)