Depositors at Banco Espírito Santo, whose money was switched into high-risk commercial paper made worthless when the bank collapsed in August 2014, are close to a deal that would see some of them receiving 75% of their money back.
Nuno Vieira, the lawyer working on behalf of a group of those affected, commented, “The solution involves creating a fund that will lump together everyone’s rights and will try and recover all the money through the courts over the coming years. This fund will pay part of the amounts owed to all the groups of non-qualified investors in this commercial paper.”
There have been meetings all week with a solution expected by the end of Friday but, after months of negotiation, the nettle seems hard to grasp.
The Portuguese Stock Exchange Commission (CMVM), the Bank of Portugal, Banco Espírito Santo managers, the Treasury, the association of over 2,000 victims, and their lawyers again have failed to nail the deal.
The parties are haggling over how much the victims should receive and the Bank of Portugal has succeeded in dragging out the process for months.
When António Costa took over as Prime Minister in the autumn of 2015, he commented that it was not beyond the wit of man to sort out this situation and found it inexplicable that the Bank of Portugal and the CMVM each blamed the other for the misselling of investments by BES branch staff, resulting in neither regulator being responsible.
The deal discussed this week, but with no resolution, is that those customers duped into investing in high risk commercial paper, rather than keeping their investments on deposit and thus guaranteed to €100,000 under the Bank Guarantee Scheme, should get back between 50% and 75% of their money.
The percentage to be repaid depends on the oroiginal amount invested with those who lost up to €500,000 receiving 75% of the invested capital, up to a maximum value of €250,000.
Those who had over €500,000 invested will receive half their money back.
The repayment is planned to be dragged out for as long as possible, at least three years, by a new vehicle to be set up and financed mainly by the Resolution Fund with those BES customers who agree, waiving their rights to take further legal action.
