(Updates with more details)
By Sergio Goncalves
LISBON, June 11 Portugal's Espirito Santo banking family and its partner Credit Agricole will have to share control of Banco Espirito Santo with other investors after the bank's successful 1 billion euro capital increase diluted their holdings, the bank's chief executive said on Wednesday.
The Espirito Santo family and French bank Credit Agricole held 47 percent of BES, Portugal's largest bank, though a holding company known as Bespar. But in May they abandoned this structure and took direct stakes in BES.
Chief Executive Officer Ricardo Espirito Santo Salgado told Reuters that "since the moment that Bespar ceased to exist, control was lost."
Bespar was owned jointly by Espirito Santo Financial Group (ESFG) - a holding company of the Espirito Santo family - and Credit Agricole.
After new shares are issued for BES's capital increase, ESFG will hold 25 percent of BES and Credit Agricole 15 percent.
"As such, the situations are very different, in which nobody has control," the chief executive said. "There aren't many banks at the European level that (have) such large shareholders."
"The (Espirito Santo) group will have to share (control) with other shareholders and explain well what the strategies are and what policies to follow."
The chief executive said Wednesday's rights issue had been a success and pointed out that the demand for new shares was 178 percent higher than the supply.
He said the rights issue had not been hit by what the bank had described as "material irregularities" involving one of the Espirito Santo family's holding companies.
"This is a very important aspect," he said, referring to the fact that the bank had been isolated from these issues.
"This is the tenth capital increase we have carried out since the privatisation in 1992," he said. "This was the one in which the key shareholders - ESFG and Credit Agricole - did not take up their full positions and it was the one that had the most success, in spite of the 'risk factors' in the prospectus."
"This shows BES' strength well and its capacity of acting in capital markets with plenty of confidence, independently of these less favourable circumstances," he said.
The risks identified in the prospectus for the capital increase focused on "reputational" risk to the bank due to the fact that the bank had sold commercial paper (bonds) issued by the troubled holding company through its branch network to clients.
He said that Rioforte - another holding company of the Espirito Santo family that owns 49 percent of ESFG - is set to carry out a capital increase of up to 1 billion euros ($1.36 billion) in the next two or three months.
Asset sales by Rioforte are also proceeding, he said, adding that there are more foreign investors interested in investments in Portugal. ($1 = 0.7345 Euros) (Reporting By Sergio Goncalves; Writing by Axel Bugge; Editing by Laura Noonan and Jane Merriman)