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History of Banco Espírito Santo
A value creation track record
The Banco Espírito Santo (BES) started with the business of José Maria do Espírito Santo e Silva (Lisbon, 1850-1915), who in 1869 traded in loan securities and currency exchange transactions in his “Caza de Cambio” in the Calçada do Combro in Lisbon.
A skilled decision-maker and unafraid of personal sacrifice, in 1877 he confided: “I work until 2 at night and at five or six in the morning I start work again on invoices, as during the day I don’t have enough time to trade and to collect payment on other term sales of bonds and premiums”.
Working non-stop and with a decisive exchange management strategy, both personally and corporately, but always as the dominant partner, from the 1880’s he set up a succession of banking institutions right in the financial heart of Lisbon, specifically in the Rua Nova d’El Rey, also known as Rua dos Capelistas, no. 95 (now Rua do Comércio).
As from 1884, and always as the dominant partner, he founded a number of banking institutions: Beirão, Silva Pinto & C.ª, (1884-1897), Silva, Beirão, Pinto & C.ª, (1897-1911), J.M. Espírito Santo Silva & C.ª (1911-1915). With the death of its founder on the 24th of December, 1915, the company dissolved to give way to the Casa Bancária Espírito Santo Silva & C.ª, managed by his son, José Ribeiro Espírito Santo e Silva who, on the 9th of April, 1920, transformed the Banking House (Casa Bancária) into a bank, with a share capital of 3,600,000 Escudos.
The first agency was opened on the same day as the first step in a strategy drawn up with the aim to “take our banking services ever closer to our clients”. The opening of branches in Porto and Caldas da Rainha (1921), Funchal (1923), followed by Coimbra, S.João da Madeira, Braga, Faro, Santarém, Ovar, Torres Novas, Gouveia, Estoril, Tortosende, Abrantes and Covilhã from 1927 to 1937 were the early landmarks of his pioneering management in private banking.
In the 1920’s, in spite of the political, economic and social turmoil that made some banks bankrupt, BES strengthened its position, and in 1926 it was among the five largest private banking institutions.
With the new management model implemented at the end of 1932 by Ricardo Ribeiro do Espírito Santo e Silva, a new stage of consolidation and expansion began for the company.
During the following years the growth in the retail network, the increase in market share, the diversification of banking transactions and organic modernization were factors which helped Banco Espírito Santo to become the market leader in private banking in Portugal in 1936.
Realizing the aims of the Espírito Santo bankers during the 1930’s, BES with its 18 city and provincial branches had the largest geographic network of outlets.
In 1937, and via the merger with Banco Comercial de Lisboa (founded in 1875), the company’s name was changed to Banco Espírito Santo e Comercial de Lisboa (BESCL).
In the following decades the opening of new branches continued, particularly in Ponta Delgada (1946), following the acquisition of the Caixa de Crédito Micaelense (formed in 1918).
Upon the death of his brother on the 2nd of February, 1955, Manuel Ribeiro Espírito Santo Silva became Chairman of the Board of Directors.
BESCL played an active role in the internationalization of the Portuguese economy which began in the 1950’s, achieving a wide distribution of credit and taking part in all of the bond and securities issues which took place in Portugal as a result of the Economic Development Plans. The policy of continuing to open branches accompanied the thrust of expansion: 47 were opened in 1960 and 82 in 1966.
In terms of the innovation of banking products and services particular reference should be made of the launch of personal credit in 1965 and of the launch of travellers’ cheques and the start of the Cheque Payment System in the following year.
In this same year the banker Blandy Brothers, operating in Funchal, was acquired.
In the 70’s the BESCL internationalized its interests: in 1972 it became co-founder of Libra Bank and, in the following year, associated with the First National City Bank of New York, it founded Banco Inter Unido in Luanda, with a share capital of 170,000,000 Escudos.
Upon the death of his father, Manuel Ribeiro Espírito Santo e Silva in March 1973, Manuel Ricardo Espírito Santo e Silva became Chairman of the Board of Directors.
Shortly afterwards, Decree Law No. 132-A of the 14th of March, 1975 nationalised Portuguese credit institutions headquartered in Portugal. Prevented from carrying on business in Portugal, the Espírito Santo Group (ESG), headed up by Manuel Ricardo Espírito Santo e Silva restructured its financial interests abroad in countries such as Brazil, Switzerland, France and the United States of America. In the same year Espírito Santo International Holding was formed with its head office in Luxembourg, and three years later the Compagnie Financière Espírito Santo was founded in Lausanne.
In the 1980’s and following the opening of the banking activity to private initiative, ESG returned to Portugal and, in 1986, in partnership with the Caisse Nationale de Crédit Agricole and the support of a group of Portuguese shareholders, it set up the Banco Internacional de Crédito (BIC).
Espírito Santo Sociedade de Investimentos (ESSI) was formed in the same year with the participation, among other financial institutions, of the Union de Banques Suisses and the Kredietbank of Luxembourg.
In 1989-90, with the participation of PREDICA, an insurance company formed in 1987 by the Caisse Nationale de Crédit Agricole (CNCA), the ESG recovered the Companhia de Seguros Tranquilidade and, in 1990-91, also in partnership with the CNCA, it recovered the Banco Espírito Santo.
Once again in control of the bank, the ESG employed senior staff who had occupied positions on the Board of Directors and among the management of BES, such as, among others, Commander António Ricciardi, Mário Mosqueira do Amaral, Ricardo Espírito Santo Silva Salgado, José Manuel Espírito Santo Silva, José Manuel Ferreira Neto, Manuel Villas-Boas and Rui Barros Costa.
After recovering the bank, the ESG began a number of projects covering the areas of administrative reorganization, technological modernization and computing, and improving the quality of customer service.
The first stage of the operation to sell 40% of the share capital of BESCL took place on the 9th of July, 1991, with the remaining 60% being purchased early in 1992. In the second stage of reprivatization, BESCL came to have 32,000 shareholders and a group led by the ESG, associated to which was the Caisse Nationale de Crédit Agricole, ensuring the sustained future growth of the bank.
Consequently, its business became increasingly comprehensive (Commercial Banking, Investment Banking, Other Credit Institutions, Fund Management, Insurance, Broking, among others), going from a Universal Bank to a Global Financial Group – the Banco Espírito Santo Group (BES Group).
In 1992 BESCL moved into the Spanish market after the acquisition of Banco Industrial del Mediterráneo, which later changed its name to BES (Spain), and ESAF - Espírito Santo Activos Financeiros – was formed. Three years later the Banco Espírito Santo do Oriente was opened in Macao, and in 1998 it was the turn of Société Bancaire de Paris (later Banque Espírito Santo et de la Vénétie).
Finally, by a deed signed on the 6th of July, 1999, BESCL adopted the name Banco Espírito Santo (BES).
One year later it consolidated its investments in Spain with the acquisition of Benito y Monjardin and of GES Capital, while in the United States of America it acquired the capital of Banco Espírito Bank, whose private banking business is aimed at clients in Latin America, especially Brazil.
Banco Espírito Santo dos Açores started up in July 2002 with the shareholders Banco Espírito Santo, as majority shareholder, and the Caixa Económica da Misericórdia de Ponta Delgada.
In January, 2003, BES acquired Bank Espírito Santo International, Limited and began to merge its sub-companies Besleasing Mobiliária, Besleasing Imobiliária and Euroges into a single entity and brought Espírito Santo Dealer into Banco Espírito Santo de Investimento, while one year later BES’ subsidiaries Espírito Santo Activos Financeiros and Banco Espírito Santo (Spain) reached an agreement to acquire all of the asset management units (Lusogest, SGIIC and Lusopensiones, SGFP) from Banco Simeón (the Caixa Geral de Depósitos Group in Spain).
The following month saw the launch of “BES 360o”, the new concept in the commercial approach to the Affluent segment, at the same time as the merger by incorporation process was concluded for the companies Euroges, Besleasing Mobiliária, Besleasing Imobiliária into a new company called Besleasing e Factoring, S.A.
In March of 2004 BES presented its first Social Responsibility Report and in June it sold 15% of its holding in Credibom to Banque Sofinco.
In August of this year, Espírito Santo Tech Ventures, SGPS (100% held) sold all of its holding in Clarity Payment Solutions and, in September, the subsidiary Banco Espírito Santo S.A. (Spain) reached an agreement with Hypovereinsbank (HVB Group) to acquire all of the share capital of Banco Inversión.
In February, 2005 BES notified the market that it was increasing its holding in Banco Bradesco, S.A. from 3.56% to 6.74%, giving it a total of 3.39% of the share capital of this Bank, while on the 31st of December it announced that it was absorbing BIC.
In August of 2005 BES became the first Portuguese financial group to subscribe to the Equator Principles, a set of procedures adopted voluntarily by financial institutions in managing the socio-environmental issues associated to project finance operations worth over 50 million dollars.
In January, 2006 it renewed its corporate identity, changing its image on all of its means of communication, aimed at
transmitting its capacity for rejuvenation, vitality and modernity based on the experience and wisdom of over a century of financial business.
In May, 2007 BES informed that its merger by incorporation of its Spain branch had been concluded. This was aimed at improving operative efficiency through the use of common structures and also to help to increase its penetration into the corporate segment.
In this year BES was included in the FTSE4Good, a leading international reference in terms of listed companies with the best sustainable development practices, and was elected Bank of the Year in strategic terms and for the best quality of objectives achieved by the magazine The Banker of the Financial Times Group.
Through a policy of organic growth and international expansion, BES increased its market share from 9% in 1992 to 20.7% in 2008 (23.8% in the corporate segment) a feat which made it the third largest bank in Portugal.
In March, 2008 BES Angola, in partnership with ESAF, formed BESA-ACTIF, the first investment fund management company operating in Angola.
The appointment of the new corporate offices for 2008-2011 was approved in the General Meeting of the 31st of March, reinforcing the number of independent directors in line with the best Corporate Governance practices.
In 2009, with a network of more than 730 branches in the retail segment in Portugal, BES was elected the best bank in the Trade Finance area by the international magazine Global Finance for the third consecutive year.
In short, besides its financial activity, there is another BES that reconciles its business principles and practices with its interest in improving the quality of life of its clients, employees and shareholders through a vast Social Responsibility programme based on a variety of areas including cultural patronage (for example the BES Photo and BES Revelação prizes), its science awards (BES Innovation award), education and literacy, the environment (Biodiversity prize) and social solidarity.
From the 19th to the 21st century, BES’ activity has been based on the creation of value as shown by its sustained growth in absolute and comparative terms (market share, in terms of productivity, financial solidity and profitability. Today, as a solid financial institution, it is one of the major pioneers in competitive pioneering, at the heart of corporate social responsibility, ethical values, banking products, technological innovation and modernization and in sustainable development practices.
It is by leading the way in organic growth and in its strategy of implementing a multi-specialist national and international business model that BES, as a Universal Bank, assumes the role as the coordinator of a Financial Group – the BES Group, promoting and diversifying its range of financial products within its base of specialised strategic business units using its branch network as the main vehicle for selling its products.
With the wisdom and experience it has inherited from the past, BES plans the future based on its unique style of trading, investing, managing, and ultimately being itself.
In 2010, BES pursued its course of international expansion “from Africa to America, from Europe to Asia”.
On the 16th of April it acquired a 40% holding in the share capital of Aman Bank for Commerce and Investment Stock Company («Aman Bank»), a private bank founded in 2003, headquartered in Tripoli, Libya, for 23.3 million Euros, at the same time as a capital increase in which BES subscribed a percentage equivalent to the share capital acquired (40%), in an investment of around 40.3 million Euros.
On the 6th of July BES Cabo Verde (BESCV), a universal bank, was formed under Cape Verdean law, with an initial capital of 13 million Euros and twenty days later, the holding company BES África, S.G.P.S., S.A., signed a memorandum of understanding for the acquisition of a 25.1 % stake in the share capital of Moza Banco, S.A., a Mozambican bank founded in June 2008.
On the 6th of August ESAF - Espírito Santo Activos Financeiros (BES’ subsidiary in Spain) bought, through Espírito Santo Gestion, SGIIC, SA., all of the share capital of Gespastor SGIIC, a collective investment institutions management company, for € 25.7 million Euros, and three days later, BES in partnership with Banco do Brasil and Bradesco signed a memorandum of understanding aimed at defining a common strategy for development on the African continent, through BES África, the holding company of the BES Group for its holdings in financial entities in Africa.
On the 24th of November, BES Investimento received authorization to acquire a 50.1% stake in Execution Holdings Limited, an acclaimed international investment banking and brokerage group, headquartered in London. Shortly afterwards, the site www.planetabes.pt dedicated to the strategic areas in which the Bank operates (biodiversity, financial literacy, innovation, renewable energies and photography) went on-line.
Near the end of the year, on the 23rd of December, through Espírito Santo Gestion, ESAF - Espírito Santo Activos Financeiros bought all of the share capital of Gespastor SGIIC from Banco Pastor.
With regard to prizes and awards, it is worth highlighting the Bank’s nomination for the fifth consecutive year as best bank in trade finance in Portugal by the magazine Global Finance; the Corporate Citizenship Award for the best national banking institution in social, environmental and economic areas in a study by PricewaterhouseCoopers and AESE; elected Financial Leader in the Engagement Rating Awards 2010; came in 1st place in the financial sector of the ACGE index for 2010; the Best Investment Bank in Portugal elected by the magazine World Finance for the 3rd consecutive year, Best Investment Bank in Portugal in the Euromoney 2010 Awards for Excellence; and it was voted by Euromoney Real Estate Awards 2010: Best Bank for Debt Capital Markets in Portugal; Best Bank for M&A Advisory in Portugal and Best Bank for Equity Finance in Portugal.
Besides its financial activity there is another BES which reconciles its business principles and practices with the interests and improved quality of life of its Clients, Employees and Shareholders through a vast Social Responsibility programme based on a variety of areas such as cultural patronage, support for science, education and literacy, the environment and social solidarity.
From the 19th to the 21st century, BES’ activity has been based on the creation of value, which has led to sustained growth in absolute and comparative terms (market share), in terms of productivity, financial solidity and profitability.
These days its presence is felt in 25 countries and 4 continents, through branches, offices of representation or sub-companies, making the BES Group the most international of the Portuguese private financial groups. With the wisdom and experience it has inherited from the past, BES plans the future based on its unique way of being, trading, investing and managing, under the motto: “Changing with the world for over 140 years”.
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