LUXEMBOURG/PORTUGAL--(BUSINESS WIRE)--
The issuer advises that the following replaces the Espírito Santo Financial Group S.A. Results of SIP announcement released at 18:31 GMT on Friday, Dec. 16.
The second bullet point has been amended to read: “During the fourth quarter of 2011 the ESFG Group undertook three public exchange and purchase offers which resulted in a EUR 321 million reinforcement of its Tier I capital”. (instead of "reinforcement of its issued share capital".)
All other details remain unchanged.
Société Anonyme
Registered Office: 21/25 Allée Scheffer, L- 2520 Luxembourg
R.C.S. Luxembourg B 22.232
Information by the banks on SIP – Results of the Special Inspections’ Programmes
ESFG Group
Luxembourg/Portugal – 16 December 2011- Espírito Santo Financial Group S.A. (“ESFG”) (NYSE Euronext Lisbon: ESF; Bloomberg: ESF PL; Reuters ESF LS) informs on the results of the Special Inspections’ Programme:
The Bank of Portugal announced today the first global results of the Special Inspections’ Programme (SIP) undertaken as part of the measures and actions agreed by the Portuguese authorities for its financial system, within the framework of the Programme of Economic and Financial Assistance agreed with the IMF/EU/ECB in May 2011.
This programme of inspections of the eight largest Portuguese banking groups, including Espírito Santo Financial Group S.A. (ESFG Group), had as its objective the validation of the information, as of 30 June 2011, on credit risk used in the valuation of these groups’ financial solidity, through an independent valuation of their credit portfolios, and of the adequacy of their policies and procedures for risk management as well as confirmation of the calculation of their requirements for credit risk.
This exercise focused on the valuation of credits of EUR 44.1 billion of ESFG’s portfolio covering 86% of the ESFG Group’s total credit portfolio. This valuation concluded that there is a need to bolster the value of the individual impairment registered in the Group’s consolidated accounts by EUR 125 million. This amount represents 0.3% of the analysed global credit portfolio and 8.4% in the value of impairments registered in relation to that portfolio.
It is noted that, as of September 2011, the ESFG Group constituted additional impairments for the sum of EUR 21.0 million on the aforementioned credits.
In the context of the SIP it was also noted that there was the need to adjust the value of the risk weighted assets (‘RWA’) corresponding to an increase of 2.1% on the total amount calculated for that date. It is noted that the regulatory changes applicable after the reference date of the SIP, in particular the changes in the legislation (CRD III), to be implemented by the end of 2011, will result in a reduction in value of Risk Weighted Assets equivalent to 1.1% based on data as at 30 June 2011. The effect of the changes registered after 30 June 2011 have not been taken into consideration in the estimated impact of SIP on the Tier 1 ratio.
The combined impact of these results of the solvency evaluation of the ESFG Group, as of 30 June 2011, resulted in a slight decrease in the Tier 1 Ratio from 8.6% to 8.3% but which remains above the 8.0% minimum level required on that date.
The amount needed for the reinforcement of the ESFG Group’s capital as a consequence of the SIP recommendations, will, in accordance with the regulations of the Bank of Portugal, need to be resolved by June 2012. Consequently the amount to be included in the strategic capitalization plan that the ESFG Group will present in the beginning of 2012 and in which it will specify the measures it will have to take to face the needs to reinforce its issued capital, will also include those deriving from the EBA exercise.
In what concerns the improvements identified in the policies and procedures followed in the management of credit risk, ESFG will set up a plan for their implementation in the short term for presentation to the Bank of Portugal.
Additionally, ESFG Group informs that:
• During the third quarter of 2011 the ESFG Group increased its credit provisions by EUR 143.4 million, which resulted in an increase in the balance sheet from EUR 2.028 billion (June 2011) to EUR 2.144 billion (September 2011). As a consequence, the ratio provisions/credit increased from 3.70% (June 2011) to 3.90% (September 2011). Of the EUR 143.4 million provisions made in the 3rd quarter of 2011, EUR 21 million reflect the need for the additional reinforcement of provisions identified in the SIP report;
- During the fourth quarter of 2011 the ESFG Group undertook three public exchange and purchase offers which resulted in a EUR 321 million reinforcement of its Tier I capital”.
The transactions for the reinforcement of its issued capital together with the changes in legislation mentioned above, will have had , as at 30 June 2011, a positive impact on the Tier I ratio of 0.56 percentage points.
Contacts:
Filipe Worsdell
Espírito Santo Financial Group S.A.
+44 203 4292100
Faisal Kanth
Taylor Rafferty
+44 207 6142900
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The Espírito Santo Financial Group provides, through its subsidiaries, a global and diversified range of
financial services to its clients including Commercial banking, Insurance, Investment banking, Stockbrokerage and Asset management in Portugal and internationally. For additional information on Espírito
Santo Financial Group, its subsidiaries, operations and results, please visit the Company’s website on