Letter of credit (L/C) irregularities have been reported at Portugal's troubled Banco Espírito Santo (BES).

The country's largest listed bank reported in late July a massive 3.58 billion euro loss, the largest ever for a Portuguese institution.

Unvetted L/Cs

According to local media reports, 'unvetted' L/Cs had been accounted for outside the bank's normal accounting system.

The L/Cs have apparently been uncovered by BES's new management regime installed last month by Portugal's central bank.

Other issues at the bank include problems in its Angolan operations and possible fraud by former managers.

Central bank intervention

According to the central bank, BES's losses have jeopardised its compliance with the minimum solvency ratios and a new supervisory committee comprised of PricewaterhouseCoopers professionals is now monitoring the bank's recovery plans.

The central bank has also installed Vítor Bento as BES's new chief executive

Bank exposure

The bank is heavily exposed to other companies in the Espírito Santo family business empire, which has been struggling since one of its companies defaulted on loan repayments in early July.

Three of the family's holding companies have filed for bankruptcy protection.

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