July 24, 2014 / 8:46 AM / 3 years ago

Portuguese bank shares continue surge, BES up 9 pct

LISBON, July 23 (Reuters) - Shares in Banco Espirito Santo spiked another 9 percent on Thursday, adding to the previous day’s gains of 14 percent after two major investors bought into the beleaguered bank, and other Portuguese banks also rallied.

BES rally went on even after U.S. investment bank Goldman Sachs’s explained on Wednesday afternoon that it bought a 2.27 percent interest in the bank on July 15 on behalf of clients rather than for itself. U.S. hedge fund D.E. Shaw took a 2.7 percent stake on July 14 and has made no public comments.

“That was an important clarification by Goldman but the market appears to have brushed it off, what matters is that someone bought into BES. It had fallen a lot, so our market, which is not very liquid, now has these harsh upward moves,” said Gulater Pacheco, a trader at GoBulling brokers in Porto.

Before the rally, BES, Portugal’s largest listed bank by assets, had lost about 60 percent of its value in the last month as investors fretted about its exposure to companies linked to its founding family, the Espirito Santos, who retain a 20 percent stake in the bank. Two of these family companies, ESI and Rioforte, recently filed for creditor protection.

Other Portuguese banks, whose shares suffered from the Espirito Santo fallout in recent weeks, also helped to push Portugal’s PSI20 stock index 1.5 percent higher by 0836 GMT.

Millennium bcp, which completed a 2.25 billion capital increase amid strong investor demand on Tuesday, surged 7.5 percent. Banco BPI was up over 3 percent after posting a first-half loss after the market close on Wednesday, which it attributed to a forced sale of sovereign debt to comply with European solvency rules. BPI also said it had no direct exposure to Espirito Santo family’s troubled holding companies.

“The results were not too bad, all things considered, and their remarks on exposure also helped,” Pacheco said.

Reporting by Andrei Khalip; Editing by Laura Noonan

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