Portugal’s central bank says the solvency of embattled bank Banco Espirito Santo is “solid” and that steps have been taken to avoid contagion from Grupo Espirito Santo, which is its largest shareholder and missed a debt payment today.
The story was the main catalyst for risk aversion today.
If Portugal can quickly diffuse these problems then sentiment in European stocks (and the euro) could rebound. Then again, even if the bank was in real trouble you would expect the same kind of statement from the Bank of Portugal in order to shore up sentiment and prevent a run on the bank.
