Banco Espirito Santo, Portugal's biggest publicly-traded bank by market value, fell the most in almost a year on a plan to raise €1.05 billion in a rights offer. Shares declined 13 per cent.

The bank is selling shares to create a capital buffer, strengthening its ratios to face a tougher regulatory framework, and as the European Central Bank’s stress tests approach.

“There was some pressure to increase capital ratios to levels closer to their Spanish peers, whose fully-loaded common equity Tier 1 ratios are in some cases above 10 per cent,” said Carlos Peixoto, analyst at Banco BPI.

“The fact that Espirito Santo Financial Group and Credit Agricole will probably see their stakes diluted after the offer is also weighing on Banco Espirito Santo shares,” said Peixoto. – (Bloomberg)