Following Banco Espirito Santo S.A. (BES) reporting a €3.6 billion loss on July 30, 2014, the Bank of Portugal announced, on Aug. 3, 2014, a resolution plan under which we understand BES has kept certain meaningful problem assets as well as primarily all subordinated debt, hybrid instruments, and shareholders' equity. We also understand that BES' general banking activities and assets--together with almost all customer deposits and other senior obligations--were transferred to the newly-formed Novo Banco. We have revised the CreditWatch implications to developing from negative on our 'B-' long-term counterparty credit rating on Banco Espirito Santo de Investimento S.A. (BESI)--that has now been transferred to Novo Banco--and on the 'B-' and 'CCC-' ratings on BESI's senior and subordinated debt, respectively.
