Société Anonyme

Registered Office: 22/24 boulevard Royal, L-2449 Luxembourg

R.C.S. Luxembourg B 22.232

Espírito Santo Financial Group, S.A. informs on second phase of special limited review

Luxembourg/Portugal - 29 May 2014 - Espírito Santo Financial Group S.A. ("ESFG") (NYSE

Euronext Lisbon: ESF; Bloomberg: ESF PL; Reuters: ESF LS) announces the following:

ESFG has been informed that the second phase of the special limited review of the pro forma consolidated financial statements of Espírito Santo International, S.A. ("ESI"), a company incorporated under the laws of Luxemburg with an indirect qualified participation of 49.2% in ESFG, has been recently concluded by an independent auditor ("Limited Audit") in respect of its financial situation as of 31 December 2013.
In the Limited Audit, material irregularities have been identified in the financial statements of ESI, affecting the completeness and trustworthiness of its accounting records, consisting notably in omissions in the accounting of liabilities in a relevant amount, overvaluation of assets, non-recognition of provisions for risks and other contingencies, inadequate accounting records and transactions in a form that does not correspond to the substance.
As a result of these serious irregularities and considering its extremely negative financial situation, ESI has decided: (i) to reinforce its "corporate governance" structure by appointing an executive committee and implementing changes in the composition of the board of directors, eliminating the existence of common directors between ESI and the other financial operating companies of the Espírito Santo Group ("GES"); (ii) to prepare annual consolidated accounts starting from 2014 onwards; (iii) to establish a deleveraging plan, which was reflected in the business plan and in the cash flow statements projected for the years 2013 through 2023; and (iv) to appoint external advisors to assist in the deleveraging process and the reorganization programme.
As referred to in the notes to the consolidated financial statements of ESFG by reference to
31 December 2013, as of that date the direct exposure of ESFG group to ESI and its subsidiaries (through Espírito Santo Financière, S.A. and ES Bank Panama, S.A.) amounted to 1.3 billion euros, being its repayment partially guaranteed by collateral granted by ESI, notably pledge of Rio Forte Investments, S.A.´s shares and mortgage of a real estate in Miami, USA. The indirect exposure of the ESFG group to ESI, notably resulting from the acquisition of debt instruments issued by ESI and its subsidiaries by clients of ESFG group amounted, in 31 December 2013, to 6.039 billion euros, of which 3.783 billion euros were held by retail clients (1.5 billion euros held by retail clients of Banco Espírito Santo, S.A.
("BES") group).

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The Espírito Santo Financial Group provides, through its subsidiaries, a global and diversified range of

financial services to its clients including Commercial banking, Insurance, Investment banking, Stockbrokerage and Asset management in

Portugal and internationally. For additional information on Espírito

Santo Financial Group, its subsidiaries, operations and results, please visit the Company's website on

www.esfg.com

Société Anonyme

Registered Office: 22/24 boulevard Royal, L-2449 Luxembourg

R.C.S. Luxembourg B 22.232

However, we stress that on 19 May 2014, the amount of the debt instruments issued by ESI and held by non-institutional investors of BES group had already been reduced to 395 million euros, while in turn the amount held by institutional investors had been reduced to 564 million euros.
In order to deal with the exposure of the ESFG group (including the exposure of BES group) to ESI's financial situation by reference to 30 September 2013, the independent auditor had assessed, in the first phase of the Limited Audit, that it would be necessary to create a provision corresponding to no less than 700 million euros.
The amount of this provision was calculated assuming that the reimbursement of the referred debt instruments will be performed through the implementation of the deleveraging plan, shareholders' support, their ability to obtain or renew lines of credit before the financial markets and, finally, through the support from ESFG group and BES.
It is also important to note that the second phase of the Limited Audit has not revealed any facts that would imply a reinforcement of the above mentioned provision of 700 million euros, which provision is already recognised in ESFG's consolidated financial statements by reference to 31 December 2013. Likewise, this Limited Audited has not revealed any fact that would imply changes to the consolidated financial situation of BES by reference to 31
December 2013.
ESFG expects that the reorganisation and deleverage plan prepared by ESI will rebalance its financial situation and allow the repayment of its debt.
ESFG also informs that it is already implementing a set of additional measures, notably (i) preparation of the reinforcement of its consolidated own funds in order to strengthen the existing capital buffers; (ii) simplification of the group structure and reinforcement of measures, procedures, mechanisms and strategies created in the context of the corporate governance, internal control and risk self-assessment in order to ensure an adequate independence vis-a vis the non-financial branch of GES, and (iii) total and final separation of the brands used by each branch of GES and refraining from selling to retail clients, directly
or indirectly, any debt issued by entities from the non-financial branch of GES.

###

The Espírito Santo Financial Group provides, through its subsidiaries, a global and diversified range of

financial services to its clients including Commercial banking, Insurance, Investment banking, Stockbrokerage and Asset management in

Portugal and internationally. For additional information on Espírito

Santo Financial Group, its subsidiaries, operations and results, please visit the Company's website on

www.esfg.com

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