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| Portugal's Largest bank is trying to ease it's investors and saver. |
It has said that it has sufficient finances to deal with its parent company's debt problems.
On Thursday, the banks's financial strength hit the stock market. On the other hand, Portugal's central bank said investors and saver should not be worried about the bank's financial situation.
What's the impact?
Banco Espirito Santo (BES) and Espirito Santo Financial Group- which holds a 25% stake in BES - both's shares fell sharply on worries about the financial health of the Espirito Santo group. BES shres were even suspended for regulation in Lisbon stock market. It closed at 0.4810 euros in Lisbon.
In order to remove this fear and recover from the loss the group is releasing a restructuring plan of Espirito Santo Group.
It even said,"BES Executive Committee believes that the potential losses resulting from the exposure to Espírito Santo Group do not compromise the compliance with the regulatory capital requirements."
Mr Pedro Passos Coelho, Portugal's Priminister said: "There is no reason for the state to intervene in a bank which has solid capital and which has a comfortable margin to deal with any eventuality, even the most adverse".
These events initiated a chain reaction in Europe and US about the perception of European banks. The bank's trouble is expected to affect Portugal seriously since it's last bailout. In the harsh condition of the financial crisis, Portugal took a 78bn euro ($106bn; £62bn) bailout from its European partners and the International Monetary Fund. The government's burrowing costs reached 3.5% in April which was eight-year low but the country's financial sector's condition are pushing it back up.
Even though strategists are not sure about the outbreak of the crisis to other countries and how will the bank do in future, there's still no certainty that the market is going to take it normal.
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