Portugal's stock market regulator, embroiled in a dispute with the Bank of Portugal over which of them should compensate BES investors, today said that its legal department had concluded that ‘good bank’ Novo Banco must stump up the refunds.
The regulator, CMVM, said that those who had bought bonds in BES branches, later to find they had bought shares in failing Grupo Espírito Santo companies, should be repaid from funds now held at Novo Banco.
This unsurprising opinion today was delivered to the Parliamentary Commission of Inquiry looking into the circumstances leading up to the collapse of BES and other Grupo Espírito Santo companies.
The market regulator, led by Carlos Tavares, has said all along that investor funds registered at BES should have been transferred to Novo Banco last August when the bank was divided into two parts.
At issue is €527 million invested in-branch by 2,500 customers of the former Banco Espírito Santo. None of them are happy.
The Bank of Portugal’s governor, Carlos Costa says that Novo Banco has no responsibility at all for the repayment of this debt and says that BES is responsible for it, which rather conveniently renders the amount worthless.
The problem with the regulator’s opinion is that the whole issue will be decided on by the Bank of Portugal which hardly is likely to reverse its own opinion, especially as Novo Banco is being sold off and does not need this additional liability dangling from its prospectus.
Meanwhile, the investors whose savings have been reduced to dust are not best pleased and continue to protest in Novo Banco branches and parade around a lot in various Portuguese towns to highlight their acute feeling of having been ripped off, turned over and tucked up by Espírito Santo management.
They blame the former head of everything with the name Espírito Santo, Ricardo Salgado, who they claim knew full well that investors were in fact supporting his collapsing empire and hence the investment they were encouraged to make in BES branches was high risk, not at all what they were told when they signed the investment paperwork.
