Senior executives at the investment banking arm of failed Portuguese lender Banco Espírito Santo SA have met recently with potential suitors to explore options for salvaging the unit, according to people familiar with the matter.The investment bank’s executive officer, Jose Maria Ricciardi, and his deputies have approached potential buyers in China, Dubai and Mexico about the possibility of spinning off the bank from current owner Novo Banco, these people said.The most recent talks were held between executives of Banco Espírito Santo de Investimento SA and officials at a Chinese bank, the people said. So far, there has been no firm offer for BESI, and all talks on the investment bank’s future are at a preliminary stage, the people said.Meanwhile, BESI’s management has started selling some units and laid off dozens of staff, these people said. More than 20 people have left BESI’s London office since Banco Espírito Santo’s problems escalated in the summer and around 10 jobs were shed in New York as client activity seized up, according to the people and regulatory filings.In New York, the bank can no longer trade securities—a factor in most of the recent departures—because of the way Banco Espírito Santo was carved up into a “good bank” called Novo Banco and a rump “bad bank.” The U.S. securities license is held by Espirito Santo Bank in Miami, a part of the rump entity that is also seeking a buyer.The investment bank has cut staff in Portugal too, the people familiar with the matter said. Parts of the Brazilian business have been sold, and at least one offer has been tabled at the India unit, these people said.BESI employs around 1,000 staff, predominantly in Lisbon, São Paulo and London, and had €5.81 billion in assets on June 30. It consists of an equities-trading franchise in European and Latin American stocks, as well as a fixed-income and investment-banking business. The unit also has ties with African countries including Angola and Mozambique.In Hong Kong, BESI laid off a dozen staff and shut down its office last month, but it has held on to a local banking license for now to support a potential sale to a Chinese buyer, one person familiar with management’s thinking said.Chinese banks have been expanding in Europe and Africa, including adding investment banking capabilities. In the U.K., China Merchant Securities, China’s third-largest securities firm in terms of net capital, opened its first London office in June, joining Bank of China International and GF Financial Markets as Chinese firms with an investment banking presence in London.
ENLARGEBanco Novo workers change a Banco Espírito Santo branch layout in Lisbon, following the creation of Banco Novo in August. EUROPEAN PRESSPHOTO AGENCYAs part of a broader breakup of the Espirito Santo family empire, Chinese conglomerate Fosun International Ltd. last week bought a €460 million stake in Portuguese hospitality management companyEspirito Santo Saude SGPS AS A.Two people familiar with the matter said efforts to sell the bank could be stymied by a parallel plan to find a single buyer for Novo Banco. It isn’t clear how potential decisions around selling off substantial parts of the bank might be handled by the central bank and the banking-industry resolution fund that is Novo Banco’s legal owner. A person familiar with the situation said Bank of Portugal hasn’t decided if BESI should be sold together with Novo Banco or separately.Bank of Portugal in September hired Eduardo Stock da Cunha as a temporary chief executive to stabilize Novo Banco and get it in shape for a sale.While the investment bank is trying to cut costs, it also has the challenge of trying to retain key staff to keep clients on board, people familiar with the matter said. Nick Paulson-Ellis, head of emerging markets at the London investment bank, left last week, adding to an exodus of senior managers.Meanwhile, Banco Espírito Santo Securities India’s 25-person research arm has attracted interest from Anglo-African banking group Investec, people familiar with the matter said. In Brazil, an asset management arm was sold this month to Brasil Plural .A Lisbon-based spokeswoman for BESI declined to comment.—Patricia Kowsmann in Lisbon contributed to this article.Write to Margot Patrick at margot.patrick@wsj.com
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