Espirito Santo: complexity, opacity and moral hazard

There is absolutely nothing holy or spiritual about Portugal's Espirito Santo Group. It's a complex, opaque structure much of which is incorporated in a tax haven and part of which is suspected of fraud. It's impossible to regulate and some of the funding relationships are distinctly odd. And it includes a bank. Moral hazard de luxe. 

But haven't we seen this before? Oh yes. Read about it here


  1. I probably shouldn't be flippant here, but I am trying to imagine the conversation when Espirito Santo passed its EBA stress test back in July of 2011.

    EBA: Please demonstrate the stability of the Bank.

    BES: Well, that's hard to do when you have a very opaque ownership structure including parent companies outside the scope of the EBA.

    EBA: True enough. OK. Next!


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