Investors harmed by Novo Banco ask BdP to compensate for €19M in losses

  • ECO News
  • 27 December 2018

111 investors recall that on 29 December it will be the third year of "trauma and despair" since the central bank decided to pass BES bonds, which initially stayed at Novo Banco, to "bad bank" BES.

More than 100 private investors holding bonds transferred to the ‘bad bank’ Banco Espirito Santo (BES) asked in a letter to Banco de Portugal for a solution to the €19 million invested in obligations that had initially been protected.

In the letter, sent to Lusa by the Association of Private Senior Bondholders Harmed by Novo Banco, 111 investors recall that on 29 December it will be the third year of “trauma and despair” since the central bank decided to pass the BES bonds, that had initially stayed in Novo Banco, over to the ‘bad bank’ BES. For these investors, this implied that they would lose hope of being reimbursed for the €19.3 million invested.

They criticise Banco de Portugal, which assured that institutional investors (such as BlackRock and Pimco) were the only ones affected, when the decision turned out to have also affected private investors, “mostly with a conservative investment profile and with low financial literacy” and many of whom purchased the securities at the Novo Banco counters (held by Banco de Portugal at the time).

These investors ask for a solution to Carlos Costa, considering that it is “unacceptable” that there is no solution after three years and many meetings with various entities (Banco de Portugal, Portuguese Securities Market Commission, parliamentary groups and advisers of the president of Portugal).

The investors consider €19.3 million “insignificant for the Banco de Portugal or for Novo Banco” since it represents “less than 1% of the total of the five series handed over to BES.”

In December 2015, more than a year after the resolution of BES (which took place in the summer of 2014), Banco de Portugal decided to transfer to the ‘bad bank’ BES more than €2 billion in unsubordinated bonds that were initially under the responsibility of Novo Banco.