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ESFG ahead of the game as Portuguese economy revives

Manuel Villas-Boas tells Laurence Neville how Espírito Santo Financial Group has coped with rapidly changing fortunes and what the family-owned group plans for the future.


WHEN BANCO ESPÍRITO Santo (BES), the banking unit of Portugal’s Espírito Santo Financial Group (ESFG), announced on May 18 that it expected compound annual growth of 20% a year until 2010, investors saluted its confidence and sent the shares higher – BES’s by 2.23% and ESFG’s by 1.8% – feeling justified in their valuation of the bank at a higher multiple than rivals such as Millennium BCP and Banco BPI.

Yet BES and ESFG – the latter also controls non-life insurance company Tranquilidade and other businesses – have hardly been an overnight success. "We have grown fairly consistently over the past 15 years but because of where we operate and our size, we are only rediscovered by analysts and investors on an intermittent basis," says Manuel Villas-Boas, director and president of the executive committee of ESFG based in London.

BES and ESFG are finding favour because the Portuguese economy, which accounts for the vast majority of their revenues, is showing signs of recovery, having been moribund for much of this decade: it grew just 0.3% in 2005 and 1.3% in 2006 and was widely expected to perform poorly in 2007.

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