Bank of Portugal wins battle against international funds over BES resolution
The suit is ‘totally unfounded, as it is baseless and unproven’, and the Court has therefore decided to “acquit” the Bank of Portugal ‘of all claims’, according to the text of the ruling.
The Lisbon Administrative and Tax Court has ruled in favour of the Bank of Portugal in the pilot case brought by several international funds, such as Blackrock and Pimco, in the context of the BES resolution, considering the suit to be totally unfounded and acquitting the central bank of all claims for compensation, which exceeded two billion euros, according to Jornal de Negócios and Observador.
At issue was the decision taken in December 2015, under the leadership of Carlos Costa, to transfer five series of senior bonds worth €2.2 billion from Novo Banco to the insolvent estate of BES, the so-called ‘bad bank’. This decision led to significant losses for international investors such as Pimco and BlackRock, which carried out a kind of boycott on the purchase of debt from Portuguese institutions by large investors, but the court concluded that the Bank of Portugal’s actions were neither illegal nor likely to give rise to a right to compensation.
In its ruling, which covers 38 court cases, the court considered that ‘nothing results from the obligation of the Bank of Portugal in the resolution of BES to indicate the possibility of retransmitting the five series of senior bonds that it retransmitted through the contested act’. ‘What does result, and what the Bank of Portugal did, was to indicate in the BES resolution decision the possibility that in the future and at any time there could be a retransmission of Novo Banco bonds back to BES,’ according to the document.