Investors who suffered losses on BES sent a new letter pressuring the Bank of Portugal

  • ECO News
  • 18 December 2017

In a new letter sent to Carlos Costa, investors who suffered losses with BES pressure the Bank of Portugal once again, but commend the fact that the entity signaled it is analyzing the issue.

The large investors who suffered losses due to the decision made by the Bank of Portugal (BdP) of transferring, on December of 2015, debt from Novo Banco to the “bad” BES continue pressuring the entity headed by Carlos CostaOn the second birthday of the controversial decision, BlackRock, Pimco and other funds sent a letter to BdP in which they warn against the costs of that decision for Portugal. Nonetheless, they commend the fact that BdP signaled that the issue is under analysis.

“As we approach the second anniversary of the decision, and in the absence of any fair resolution of the issues arising from it, the decision continues to undermine the credibility of the Portuguese financial sector as a destination for foreign investment“, stated the Novo Note Group, which includes Attestor Capital, BlackRock, CQS and Pimco, in a letter sent to the governor of BdP.

"As we approach the second anniversary of the decision, and in the absence of any fair resolution of the issues arising from it, the decision continues to undermine the credibility of the Portuguese financial sector as a destination for foreign investment. ”

Novo Note Group

Attestor Capital, BlackRock, CQS and Pimco

In the document, these large funds that invested in debt from BES (Banco Espírito Santo) warned against the consequences of the decision made by the central bank. “Indeed, Portuguese banks pay significantly higher interest rates than their peers”, is stated in the letter. And until a resolution is achieved, “Portuguese banks will continue to bear the costs of this unprecedented decision in the form of higher costs of capital and a dearth of credible, long-term institutional investors in their capital structure”, they highlight. These funds also refuse to take part in any financing operations from the Portuguese Government, but also from banks, such as CGD and BCP.

BdP gives funds a sign of hope

In spite of the pressure from funds, they also commend BdP’s efforts in finding a “fair” resolution of the issue. These large investors are trying to recover the losses suffered by their clients following the Portuguese central bank’s decision of transferring 2.2 billion euros in senior debt securities from Novo Banco to the bankrupt BES.

We were pleased to have received the news that this matter would be tended to by the Vice-Governor Luís Máximo dos Santos, who has since informed us that this matter is being analysed at the highest level within the Bank of Portugal”, the Novo Note Group highlighted. ECO contacted the central bank, but it has not yet been possible to clarify this signal given by the entity headed by Carlos Costa.

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