* BES chief executive and board to resign on Friday
* Securities regulator wants explanation before market opens
* Largest shareholder ESFG not formally notified of change
* Espirito Santo family lost control of BES in capital rise (Adds market regulator, shareholder comments, share price)
By Andrei Khalip, Laura Noonan and Sergio Goncalves
LISBON, June 19 The chief executive of Banco Espirito Santo SA, Ricardo Espirito Santo Salgado, will step down on Friday following a recent capital increase in which his family lost control of Portugal's largest listed bank, local media reported Thursday.
A spokeswoman for the country's securities market regulator, CMVM, said it wants the bank to clarify the reports, which could not be immediately confirmed, before the market opens on Friday.
The bank's shares closed 2.7 percent down.
Portuguese newspaper Expresso said on its website late on Thursday afternoon that Salgado would step down and a new board for the bank would be announced on Friday.
The Bank of Portugal, which is responsible for approving the appointment of bank board directors, declined to comment.
Newspaper Diario Economico said the family's so-called Upper Council will meet on Thursday night to find a replacement for Salgado. Their choice will have to be approved by shareholders.
Neither outlet named its sources. A spokesman for Banco Espirito Santo could not immediately be reached for comment.
The largest shareholder, the Espirito Santo Financial Group, has not been formally notified of any resignations from the board or management of the bank, its chief financial officer, Filipe Worsdell, told Reuters in an email.
"ESFG has not yet received any formal confirmation of the matters that are currently being discussed in the press," the email said. "The CEO of BES and Chairman of ESFG, Mr Ricardo Salgado, will inform the Board of ESFG at the appropriate time. ESFG will, when such formal confirmations have been received, deliberate on its representation."
ESFG holds the 25.05 percent of BES that is linked to the Espirito Santo family.
Credit Agricole SA, the second-largest BES shareholder, would not comment on the reports.
Salgado told Reuters last week that his family, which founded the bank, lost control of it after a 1.045 billion euro ($1.42 billion) capital increase that was completed on June 11.
The offer drew strong demand even though the sale prospectus revealed "material irregularities" involving Espirito Santo International(ESI), a holding company controlled by the Espirito Santo family that indirectly owns the stake in the bank.
The bank has said it is insulated against problems at ESI.
There has been a longstanding dispute over who should head the bank between CEO Salgado, whose term runs until 2015, and his cousin, Jose Maria Espirito Santo Ricciardi.
Ricciardi, the chief executive of the Espirito Santo Investment Bank (BESI), unsuccessfully tried to replace Salgado via a motion of confidence late last year, but Salgado survived.
Expresso said the two were still at odds over the new CEO and that a compromise could be BES marketing executive Joaquim Goes, who has served on the bank's board for more than 14 years and is also a director of Portugal Telecom. Mr Goes failed to respond to requests for comment. ($1 = 0.7336 Euros) (Reporting By Andrei Khalip, Laura Noonan and Sergio Goncalves. Editing by Andre Grenon)