EuropeanJul 1 2014

Short selling banned in Banco Espirito Santo

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The UK’s financial regulator has brought in a temporary prohibition on short-selling regarding Banco Espirito Santo and Espirito Santo Financial Group, in support of similar action taken by the Portuguese Securities Market Commission (CMVM).

The moves follow a run on Banco Espirito Santo shares, which tumbled 16.5 per cent to an 11-month low yesterday, FastFT reports.

The UK’s Financial Conduct Authority said it was imposing the ban under EU regulations on short selling, but it did not apply to market makers who had notified it about employing an exemption.

The CMVM has said its ban will be lifted at the end of Tuesday.

Shares of both companies affected had fallen more than 16 per cent on Monday, with investors concerned about an audit by the Portuguese central bank that showed their parent company, Espírito Santo International SA, was in “serious financial condition”.

A rights issue prospectus from the bank has also warned a “serious financial situation” at the holding company could be damaging to the bank.