The Fall of Banco Espirito Santo: Holy Spirit or Devil in Disguise? Case Solution
This is just an excerpt. This case is about GLOBAL BUSINESS
PUBLICATION DATE: September 22, 2016
In 2014, after almost 150 years as one of Portugal's a lot of effective and rich households, the Espírito Santo household entirely lost control of its realm, that included Banco Espírito Santo, Portugal's biggest bank by market capital and second-largest private-sector bank in regards to possessions, in addition to risks in many monetary, non-financial, independently held, and openly traded business. Throughout the European monetary crisis of 2010 to 2014, a lot of the household's business needed capital expense. To prevent household equity dilution, the household's patriarch, Ricardo Espírito Santo Silva Salgado, committed in an imaginative money-go-round structure where Banco Espírito Santo would lawfully increase short-term industrial paper with high interest rates and offer them to 3rd celebrations that were partly owned by the Espírito Santo household. Trainees will think about whether Salgado and the board of Banco Espírito Santo acted properly or if they failed their fiduciary tasks to the non-family investors of the bank.
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