These are controlled through a non-listed holding called Espirito Santo International (ESI) based in Luxembourg. Worries over the ability of these groups to service their debts were triggered by the discovery during an audit of a "serious financial condition" at ESI, a conglomerate near the top of the pyramid of Espirito Santo family holdings.
The other fear haunting BES investors is whether the bank will be able to get back 2 billion euros of intergroup liquidity extended to its Angolan unit. The bank said late on Thursday that it would not be able to assess potential losses on its exposure to ESFG and Rioforte until a restructuring of the wider Espirito Santo group companies was announced.
If the bank is unable to recoup all of the loans to ESFG and Rioforte or has to write down their value as part of a planned restructuring of the Espirito Santo family's holdings, it would trigger losses that would have a direct impact on BES shareholders. Those shareholders include the Espirito Santo family, which still owns 25 percent of the bank, and French lender Credit Agricole with a 15.1 percent BES holding, which it has said it plans to cut. The French bank declined to comment on whether it planned to make an impairment on the value of its holding.
Portugal Telecom is exposed not only to BES itself via a 2.1 percent stake, but in the form of nearly 900 million euros in bonds issued by Rioforte. This bond holding has raised questions about the future of Portugal Telecom's planned merger with Brazilian telecoms operator Grupo Oi SA, which said last week the investment had not disclosed.