Banco Espírito Santo, Portugal's second largest bank by assets held, was nationalized "through the back door
" several days ago after the shocking revelations of money laundering and tax evasion by the bank's founding family
which had become
public over the past few months caused the bank to post a recordbreaking loss of 3.6 billion euros.
The Espírito Santo family is one of the last of Europe's great banking families
, having founded their empire in 1869, remaining neutral with their country through WWII, and surviving the 1974 'Carnation' army coup which caused the family to flee after the bank was nationalized.
Ricardo Espírito Santo Silva(Google Translate)
, once known as DDT (short for Dono Disto Tudo or 'owner of all of this/all he surveys') and one of the most powerful men in Portugal
, has been forced to step down from his position as head of the bank after being arrested
for money laundering.
Meanwhile, the rest of the European banking industry reacted poorly
that the Portuguese central bank had insisted that BES was fully capitalized for several months until the extent of the losses became clear
only days ago.
The ongoing issues have caused Oi, a Brazilian telecom company in the process of merging with Portugal Telecom (which had debt exposure to an Espírito Santo subsidiary, Rioforte), to miss out on an auction for 4G licenses
that will likely severely diminish the company's ability to compete in the Brazilian telecom market in the future.
The Oi story highlights the very complicated nature
of the Grupo Espírito Santo and the role of the Espírito Santo family
in the Portuguese economy.