Ratings boost lifts Mercantile share
Stephen Gunnion
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Financial Services Editor
MERCANTILE Lisbon Bank’s share price surged to its highest level in more than three years on Friday after ratings agency CA-Ratings said it had raised the bank’s ratings.
Mercantile gained 42%, or 7c, to 27c, its best level since November 2001. However, shares in Mercantile are highly illiquid as the group’s Portuguese parent company, Caixa Geral de Depositos, holds 91,75% of the bank, so small trades can drive the share price upwards.
CA-Ratings’ vote of confidence in Mercantile could indicate that after a torrid few years investors who stuck with the bank may be about to be rewarded.
“The group went through difficult times during the last few years struggling with asset quality and management problems,” said CA-Ratings. “Through the efforts of (Mercantile’s) new management team and the support from its main shareholder … the bank was placed on a sound footing.”
CA-Ratings said Caixa’s continued financial support for Mercantile was implied through the R555m it injected into the group through a rights issue, which lifted its stake in the bank to its current level.
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