* Bailout will see BES split up, shares delisted
* New bank will be recapitalised with 4.9 bln euros
* Junior bondholders, shareholders to bear losses of bad
* Depositors and senior bondholders protected
(Adds more details of the bad bank)
By Sergio Goncalves
LISBON, Aug 3 Portugal will spend 4.9 billion
euros ($6.58 billion) to rescue its largest listed bank, testing
the euro zone's resilience to another banking crisis just months
after Lisbon exited an international bailout.
The rescue of Banco Espirito Santo, which was unveiled after
a frenzied weekend of discussions between Portuguese and
European Union officials, comes after weeks of increasingly bad
news about the financial state of the lender, particularly its
exposure to a cascade of companies headed by its founding
Espirito Santo family.
Under the plan, Banco Espirito Santo, or BES, will be split
into a "good bank", renamed Novo Banco, and a "bad bank", which
will house BES's exposures to the troubled Espirito Santo
business empire as well as its Angolan subsidiary.
The bad bank's losses will be born by the bank's junior
bondholders and shareholders, including the Espirito Santo
family, which has a 20 percent stake, and French bank Credit
Agricole which owns 14.6 percent.
Novo Banco, or New Bank - will be recapitalised to the tune
of 4.9 billion euros by a special bank resolution fund created
in 2012. The Portuguese state will lend the fund 4.4 billion
euros. All of BES's depositors will be protected as well as the
bank's senior bondholders.
Portugal's central bank, which only days ago said that BES
could be recapitalised by private investors, said the plan would
involve no cost to the public purse because the loan would be
The Bank of Portugal expects the state to be reimbursed when
Novo Banco is eventually sold to private investors.
"The plan carries no risk to public finances or taxpayers,"
Carlos Costa, the central bank governor, told reporters in a
late night news conference in Lisbon.
The bailout is a setback for Portugal just months after the
country emerged from a 78 billion euros, three-year bailout
financed by the European Union (EU) and the International
Monetary Fund (IMF).
Portuguese bond yields rose to 3.78 percent on Friday on
expectations Lisbon would have to rescue BES. However they were
still far below rates of more than 15 percent seen in 2012, when
there were serious doubts whether the eurozone would be able to
survive a brewing debt crisis.
The rescue, which comes a year after Greece spent 28 billion
euros to rescue four of its banks, suggests that despite years
of efforts to improve the euro zone's financial and economic
management, hidden problems still may lurk in the region's
The European Central Bank is currently scrutinising the
books of the bloc's largest banks before it takes over direct
supervision of them in November.
The Portuguese government loan for the BES rescue will use
up a large chunk of the 6.4 billion euros left over from a fund
earmarked to aid the country's banks as part of its EU/IMF
In a statement, the European Commission said the resolution
plan complied with its rules on state aid.
BES's shares dropped 75 percent last week and Costa said the
bank lost access to Eurosystem liquidity after it reported a
record net loss of 3.58 billion euros due to its exposure to a
web of Espirito Santo companies.
BES not only provided loans to the companies, it also sold
billions of euros of their debt to its customers.
The spin-off of the healthy parts of BES, a household name
in much of Portugal, is an attempt by authorities to shield the
bank from the escalating troubles of its founding family.
Much of the Espirito Santo group, whose activities include
tourism, health and agriculture, have sought bankruptcy
protection in past weeks in a remarkable fall from grace of one
of Europe's most prominent business clans.
The bank's new management - put in place by the central bank
as a result of the Espirito Santo turmoil - has said it had
found new, hidden commitments made by the bank to family
companies as late as June. Management said it suspected illegal
behaviour had taken place at the lender.
($1 = 0.7450 Euros)
(Writing By Andrei Khalip; Editing by Alessandra Galloni and