June 23, 2014 / 3:45 PM / 4 years ago

UPDATE 2-BES chief sees swift move to new management, discord reemerges

* Family member says will not take part in new governance scheme

* Shareholders, central bank have to approve plan

* Shares fall on uncertainty over acceptance of new scheme (Adds Ricciardi’s letter, plans for investment bank)

By Sergio Goncalves and Andrei Khalip

LISBON, June 23 (Reuters) - The chief executive of Portugal’s Banco Espirito Santo, who agreed to step down last week, promised on Monday a swift and transparent transition to new management, but new signs of discord within the founding family may complicate the task.

The comments by Ricardo Espirito Santo Salgado, made in an internal email to employees seen by Reuters, came out as shares in BES fell, reflecting uncertainties about whether regulators and shareholders will accept the plan presented on Friday.

Adding to the uncertainty, Salgado’s cousin Jose Maria Ricciardi, who had previously challenged Salgado’s command of the bank and the Espirito Santo Group owned by the family, said late on Monday he would not be part of the group’s social bodies after the family had turned down his own governance project.

That means he will not be represented as planned on a new consultative council for BES, which is part of the new governance scheme presented by the bank’s main shareholder that still has to be approved by shareholders and the central bank.

“For over a year I have been defending structural modifications of governance at the Upper Council of the Espirito Santo Group ... (but) an alternative project has prevailed of which I was not called to take part, so my participation in the social bodies of the group’s companies is not justified.”

Ricciardi said in an email he will remain the CEO of BES Investimento, an investment bank, which he wants to make an independent entity by finding a partner and increasing its capital.

Still, Salgado, who said he decided to resign as he was turning 70 “to pass the torch of executive leadership” at BES, expected no snags in moving on to a new governance at BES.

“A swift and clear generational transition will be ensured - a transition needed for a new cycle of growth and profitability, based on the team’s enviable skill and competence and on the very important confidence of our clients,” he said.

BES shares fell 3 on Monday, extending losses suffered last week. The far less liquid shares in its main shareholder ESFG , owned by the Espirito Santo family, fell 5.8 percent.

The CEO replacement, as well as the plan to create a new consultative council to be chaired by Salgado, will have to be approved by shareholders on July 31, after which the governance model is to be submitted to the Bank of Portugal.

Salgado lauded the proposed new CEO, his chief financial officer Amilcar Morais Pires, 53, with a 28-year career at BES, as well as new board head Paulo Mota Pinto, a former Constitutional Court judge turned politician.

Pires is seen as close to Salgado.

“There is still uncertainty as the general assembly is more than a month away and due to the fact that the Bank of Portugal also has to confirm the plan,” says Albino Oliveira, an analyst at Fincor.

BES has been under intense scrutiny by the central bank, particularly after an audit discovered financial irregularities at a holding company that owns a stake in BES. BES warned of the issue last month in a share offering prospectus. The share sale deprived the family of control of BES.

“This (management) solution appears very similar to what the current CEO advocates. It remains to be seen whether it will be enough to reestablish confidence,” said Vanda Mesquita, an analyst at Millennium Investment Bank.

Earlier, sources familiar with the matter had said the Bank of Portugal had pushed for Salgado’s resignation. Local media have said tensions within the family have also led the central bank to insist on removing the Espirito Santos from BES executive management.

In his letter, Salgado acknowledged that the recent 1 billion euro capital increase and changes in BES control led “to a significant loss of influence in its management” by the Espirito Santo family, even though he and other family members will stay on the consultative Strategic Council.

The family lost control of BES after the capital increase. (Reporting by Andrei Khalip and Daniel Alvarenga; Editing by David Holmes and David Evans)

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