LISBON, Jan 8 (Reuters) - Portugal’s Banco Espirito Santo is confident it can cut dependency on European Central Bank support after a successful 500 million euro ($653.30 million) bond issue on Tuesday, the bank’s Chief Financial Officer (CFO) said.
Portuguese banks are fighting to return to the bond markets after being shut out by the euro zone debt crisis in 2010 and have been forced to rely on the European Central Bank for funds.
CFO Amilcar Morais Pires said the five-year bond deal had generated strong demand of 3 billion euros.
BES, the country’s second-largest private bank by assets, became the first Portuguese bank to return to the bond market in two years when it sold a 750 million euro 3-year unsecured bond in October. The CFO said the bank’s return to the markets had paved the way to reduce reliance on the ECB.
“We expect to progressively reduce our dependency on the ECB,” Morais Pires told Reuters. “We can’t still say the conditions in the bond market are normalised but we have witnessed a progressive improvement,” he said.
Amilcar Pires said BES had bolstered its capital ratios in 2012 using the capital markets to give the bank a strong core-Tier 1 ratio - a measure of financial strength - of above 10 percent.
BES is the only Portuguese bank to reinforce its capital via the equity market and not from the country’s European Union/IMF bailout.
About 90 percent of the Tuesday’s bond deal went to foreign investors, including 38 percent to the United Kingdom, 8 percent to Spain, 7.5 percent to Germany and 7 percent each to France and Switzerland. The bond had a 4.75 percent coupon and a re-offer yield of 4.90 percent.
BES shares closed up 1.95 percent on Tuesday, outperforming the wider Lisbon index which was down 0.2 percent. ($1 = 0.7654 euros) (Reporting by Sergio Goncalves, Writing by Daniel Alvarenga. Editing by Jane Merriman)