LONDON--Espírito Santo Bank, the Miami arm of failed Portuguese
lender Banco Espírito Santo SA, is being sold to Venezuela's
Benacerraf banking family in a $10 million deal, the Portuguese
bank said Friday.
The agreement, which is still subject to regulatory approval,
marks the end of a nine-month effort to find a buyer for the
Florida bank after Banco Espírito Santo collapsed amid allegations
of fraud in August. The Bank of Portugal that month carved out a
good bank called Novo Banco to keep serving retail and corporate
customers in countries including Portugal, Spain, Brazil and
Venezuela, but left behind a handful of unwanted assets including
Espírito Santo Bank.
The move resulted in Espírito Santo Bank customers pulling
hundreds of millions of dollars in deposits and brokerage accounts,
and the bank was ordered by the Federal Deposit Insurance Corp. in
August to find a new owner.
After months of talks with the Benacerrafs, one of Venezuela's
oldest banking families, a deal was struck. The Venezuelan family's
other holdings include Caracas-based 100% Banco, and it was once
part-owner of a U.S. bank through a shareholding in Banco Union CA,
now part of Venezuelan lender Banesco. The family patriarch,
Salomón Henry Benacerraf, was chairman of Visa International
between 1987 and 1994, according to filings.
Espírito Santo Bank, with around $660 million of assets, has
just one branch in a skyscraper owned by another bankrupt part of
the Espírito Santo group. It caters to wealthy Venezuelans and
Brazilians who want to buy Florida condominiums or make investments
through its brokerage arm.
For nearly four decades, it had a key role in raising funding
for the various companies of Portugal's wealthy Espírito Santo
family, who also sat on its board. In 2012, it was censured by the
Financial Industry Regulatory Authority for misrepresenting the
risk of Espírito Santo group commercial paper it sold to brokerage
customers.
Espírito Santo Bank cut ties with the Portuguese family last
year, but several legal and regulatory hurdles still stood in the
way of Thursday's sale agreement.
A year-long investigation by multiple agencies over a series of
transactions with ES Bank Panama, an Espírito Santo affiliate,
cumulated in a February consent order from the FDIC that was made
public last week. In it, Espírito Santo Bank agreed to improve its
anti-money-laundering controls and compliance with the U.S. Bank
Secrecy Act.
Separately, in December, Espírito Santo Bank agreed to pay $8
million to resolve a suit by the liquidator of a bankrupt Brazilian
bank over alleged money laundering.
The proceeds from the planned sale will go to Banco Espírito
Santo, where a Bank of Portugal lawyer has been put in charge of
the Portuguese bank's liquidation. The bank said that besides the
$10 million, it will receive $5 million minus any amount spent in
pending legal settlements. The bank's other assets, a stake in
BES's Angolan arm and in a Libyan bank, have already been
liquidated.
The good bank, Novo Banco, is close to being sold after a list
of potential buyers was cut to five this month.
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