The Financial Conduct Authority has banned any short-selling of Banco Espirito Santo and Espirito Santo Financial in London after shares in both companies fell 16% yesterday.
The ban on short-selling, which was introduced at the height of the financial crisis, is a rarely used power by the City regulator aimed at preventing speculators creating a run on share prices by betting they will fall further.
The move followed the decision by Portuguese stock market regulators to stop short-selling late last night as fears grow over the financial health of the two companies’ parent group, Espirito Santo International.
This followed a probe by Portugal’s central bank which found irregularities in the privately owned parent company’s accounts.
Both listed companies were also put on watch for a possible credit-rating downgrade by Moody’s last week.
Banco Espirito Santo recently raised €1 billion (£798.6 million) through a rights issue.
Shares in Banco Espirito Santo fell sharply again today in Lisbon while those in Espirito Santo Financial were up modestly.
