The price of perpetuating a long running accounting scam is the head of BES chief Riacardo Salgado, on a plate.
Ending close to twenty years at the bank, Ricardo Salgado already has resigned from the BES retail company but reappeared the next day at the head of the holding company, Banco Espírito Santo Investimento.
The Salgado move from Chief Executive to Chairman within the BES structure appeared to reward failure and was seen as a cynical dodge to keep Salgado from a more just fate. This, coupled with a lack of any sort of apology to the regulators, the Bank of Portugal or to BES shareholders, has meant Salgado has to go.
The resignation is expected to be delivered to the board tomorrow, a board whose members will have no hesitation in accepting it as they start to rebuild the banks image and fortunes.
BES group now needs a new Chief Excecutive to run its domestic banking operation and a new Chairman of the group. For Portugal’s second largest bank to have neither for any length of time will be unacceptable on many levels and a new governance structure is being looked at as a starting point in the process of change that this bank urgently needs to undergo.
Today’s scheduled meeting of the bank’s council will bring together key shareholders linked to the Espírito Santo family, and includes Ricardo Salgado. There will be a general meeting on Friday following the recent successful BES share issue which replaced the €1.2 billion missing from the accounts.
At this meeting of shareholders, Salgado is expected to hand in his formal resignation and a proposed change in the current system of governance of the bank will be discussed. If successfully adopted, a strategic advisory board will be created.
José Maria Ricciardi who heads Banco Espírito Santo Investimento (BESI) is in pole position to replace Salgado as Chairman of the holding company and he may proceed with his own idea of a future structure.
The unknown is who will replace Salgado in the key role as head of the BES domestic banking company.
BES is in a perilous position with a family struggle going on behind the scenes. The accounting scandal is but one of many, but is the final straw for the regulators as it involved the deliberate concealment of a €1.2 million debt by Espirito Santo International, the holding company of the family which, strangely, is based in Luxembourg.
