Portugal’s government and central bank assured investors on Friday that the southern European country’s financial system was sound, aiming to quell worry about the spillover effects of trouble at the Espirito Santo business empire.
“It is important that Portuguese and foreign investors... remain calm about the bank and our financial and banking system,” Portuguese Prime Minister Pedro Passos Coelho told reporters in Lisbon.
Recent disclosures of financial irregularities at a web of family-held holding companies behind Portugal’s largest listed bank, Banco Espirito Santo (BES), have raised questions about potentially destabilizing losses at the bank and other companies in the family’s orbit.
In a statement late on Thursday night, BES said that any losses relating to the bank’s 1.15 billion euro (US$1.56 billion) exposure to Espirito Santo holdings would not put it at risk. The bank said it had 2.1 billion euros in capital above minimum regulatory requirements as of March 31, taking into account a further 1 billion raised via a share sale last month.
The statement partially steadied market jitters on Friday in Portugal and beyond. European markets edged higher and Italy paid record low yields at an auction, shrugging off fears that had weighed on the sovereign debt markets earlier in the week.
Portugal’s PSI benchmark closed up 0.6 percent. BES shares opened up 11 percent when trading resumed after a suspension, though the stock then seesawed, closing down 5.5 percent, despite a ban on short selling in the stock.
Portugal’s CMVM market regulator said on Friday it had extended this “shorting” ban on BES shares for two more days.
Moody’s Investors Service said it had cut the long-term debt ratings of BES to “B3” from “Ba3” and the long-term deposit ratings to “B2” from “Ba3,” and it was on review for downgrade.
The ratings agency said the downgrade “reflects Moody’s concerns regarding BES’ creditworthiness that are heightened by the lack of transparency on the ring-fencing of BES against any troubles emerging from its holding company Espirito Santo Financial Group [ESFG] or any other group entity.”
BES’ junior debt recovered much of Thursday’s losses and its senior unsecured bonds fared even better, trading up 5 basis points after falling 2 basis points on Thursday.
Market unease lingers because questions remain unanswered around the bank’s relationship with Espirito Santo companies.
An audit found a “serious financial condition” at Espirito Santo International SA — a vast conglomerate with holdings in banks, hotels and healthcare which is near the top of the family business pyramid. ESFG later said ESI had overvalued its assets and failed to recognize losses and debts, but the reasons it got into such a financial mess are unclear. Investors are also in the dark about the size of any potential losses.
While BES gave the most detailed breakdown yet of its exposure to other Espirito Santo group companies, the bank said it could not assess the potential losses until a restructuring had taken place at its largest shareholder ESFG, and at other family holdings under the ESI umbrella.
That restructuring plan is not finished yet, but could be announced as early as next week, according to a person with knowledge of the operation. It is likely to include swapping some of the debt issued by ESI and Rio Forte into equity in those companies, as well as pushing out repayment dates on other debt. Some non-financial assets, including the Tivoli hotel chain in Portugal and Brazil, could also be sold.
Honda Motor Co absorbing Nissan Motor Co could give the two struggling Japanese brands the scale they need to take on China’s BYD Co (比亞迪), sales figures released yesterday showed. Honda, which earlier this week sketched out plans for a deal that amounts to an acquisition of Nissan, sold 3.43 million cars globally in the first 11 months of this year. Nissan said it sold just over 3 million. China’s biggest automaker BYD sold 3.76 million vehicles over the same period — a clear illustration of how Nissan and Honda are weak alone, but together might have a fighting chance. Honda and Nissan
SEMICONDUCTORS: Samsung and Texas Instruments would receive US$4.75 billion and US$1.6 billion respectively to build one chip factory in Utah and two in Texas Samsung Electronics Co and Texas Instruments Inc completed final agreements to get billions of US dollars of government support for new semiconductor plants in the US, cementing a major piece of US President Joe Biden administration’s CHIPS and Science Act initiative. Under binding agreements unveiled Friday, Samsung would get as much as US$4.75 billion in funding, while Texas Instruments stands to receive US$1.6 billion — money that would help them build facilities in Texas and Utah. The final deals mean the chipmakers can begin collecting the funding when their projects hit certain benchmarks. Though the terms of Texas Instruments’ final agreement is
Call it an antidote to fast fashion: Japanese jeans hand-dyed with natural indigo and weaved on a clackety vintage loom, then sold at a premium to global denim connoisseurs. Unlike their mass-produced cousins, the tough garments crafted at the small Momotaro Jeans factory in southwest Japan are designed to be worn for decades, and come with a lifetime repair warranty. On site, Yoshiharu Okamoto gently dips cotton strings into a tub of deep blue liquid, which stains his hands and nails as he repeats the process. The cotton is imported from Zimbabwe, but the natural indigo they use is harvested in Japan —
Printed circuit board (PCB) maker Global Brands Manufacture Ltd (精成科技) is to fully acquire Japanese peer Lincstech Co for about NT$8.4 billion (US$256.9 million) as the company aims to add high-end PCBs to its PC-centric product lineups. The company also expects the deal to help expand its manufacturing sites in Southeast Asia, as local firms diversify to mitigate geopolitical risks. “The acquisition will mean an important step for the company to further expand its presence in Southeast Asia and globally,” Global Brands Manufacture chief financial officer Weng Chia-yu (翁家玉) said at a news conference in Taipei yesterday. The company has set up manufacturing
RSS