Portugal banking worries
July 10, 2014
The IMF on Thursday said that Portugal's financial system still had trouble spots after the international bailout.
"Pockets of vulnerability remain, warranting corrective measures in some cases and intrusive supervision in others," the International Monetary Fund said in a brief statement.
Fears over the health of Banco Espirito Santo boiled over amid allegations that its parent company was covering up a 1.3-billion-euro ($1.8 billion) hole in its accounts. The bank's shares fell by a staggering 17 percent on Thursday.
Trading was suspended as a precautionary measure, with Lisbon's stock exchange dipping by well over 4 percent. In addition, the yield on Portugal's benchmark 10-year bond increased to around 4 percent.
The government in Lisbon insisted Banco Espirito Santo was solid, but a parliamentary committee said it intended to put some questions to the bank's management and the country's finance minister.
Reminder of the financial crisis
An audit requested by Portugal's central bank in May found serious accounting irregularities at Luxembourg-based Espirito Santo International, an unlisted holding company. Investors feared the firm's financial issues could contaminate other parts of the group.
Portugal was the third eurozone country after Greece and Ireland to require an international bailout.
In May of this year, the southern European country concluded its three-year bailout program, insisting it was ready to raise money again in private financial markets.
hg/nz (AP, Reuters, dpa)