Wednesday, December 21, 2016

The solution for the trader of the BES can have an impact on the public accounts – the Public.en

The agreement reached to compensate the losses of the victims of Banco Espírito Santo (BES), which involves the creation of a fund, which will finance with the banking with the guarantee of the State, does not exclude the possibility of harm to the public accounts, a safeguard that is contrary to the assurance given on Monday by the prime minister, that "the solution does not fall on the taxpayers".

The document expressly states that, "without prejudice to alternative or setting of achievement that will serve adequately the purpose of the solution have no or very limited impact on public accounts, the Fund [create] will be configured as a vehicle of private law, which will take the form of independent assets, with administrative and financial autonomy".

access limited to members of the Association of Outraged and Deceived the Commercial Paper (AIEPC), "the model solution" as it is presented, it states that "the financing contracted by the fund with the banking you have the guarantee of the State (accompanied, possibly, and in terms of the study, for a future coverage of the Resolution Fund, in terms that are compatible with the other commitments related to it)”, adding further that "the impact on the public accounts of this solution was the subject of a study by the Catholic University of portugal (…) and that was obtained to serve the purpose of taking care that the solution does not involve final burden to the taxpayer".

In the edition of this Tuesday, the PUBLIC had already advanced that the way will be provided in this guarantee of the State, whether directly or indirectly (through the counter-guarantee of banks), will only be set at the end of the first quarter, in function of the margin of manoeuvre of the Government to ensure that it will not affect the deficit – and the opening of the European Central Bank to accept the involvement of financial institutions in this solution.

what matters to the trader

The customers of the commercial paper issued by companies of the Espírito Santo Group (ESI and Rioforte) and sold by BES want to know is if it is "black on white" the guarantee of recovery between 50% and 75% of the capital invested, confirming the guarantee given on Tuesday to the PUBLIC by the president of the AIEPC, Ricardo Angelo. And it is: "The acquisition of the credits [that customers would have the right] will be made upon the conclusion of a contract (the Contract) between the fund and each of the INQPC [customers] that adheres to the solution, in terms of which the participant hereby assigns the claims for a price corresponding to 75% of the capital invested with a maximum of 250,000 euros for the applications up to 500,000 euros and 50% for applications above this value," said the document.

The model solution, which covers all customers and not just members of the AIEPC, stipulates that "the price will be paid in three instalments: the first one to take place in 2017 following the conclusion of the Contract of Adhesion, corresponding to 30% of the nominal value of the capital invested, the second and the third corresponding to the remaining value (…) to be paid in two equal parts, one in 2018 and another in 2019".

To go forward, the proposal must have the support of more than 50% of the customers, or the value applied and two incentives in the proposal that could influence the decision. The first, results from the possibility that clients can still receive more than the percentage guaranteed, and the other with hypothetical tax deductions.

"in Addition, any and all amounts recovered in excess of the amount necessary to ensure the repayment of the financing incurred by the Fund and its operating expenses, will be delivered to customers in defined proportion to the effect of, referred to in the text.

In the chapter of the benefits of the proposal it is stated that the customers who join "benefit of the solution that can eventually be found for the purpose of ensuring that the losses suffered by the customers to be deductible for tax purposes".Other benefits referred to relate to the annulment of the risk of lawsuits, and is even referred to the possibility that clients who adhere to the solution that they can "benefit from the business solution that, eventually, is obtained from the bank". That is, the association admits the possibility of being created a financial application, with a bank, which provides the money that the injured will receive, to ensure better conditions of remuneration. The adherence to this eventual solution will be voluntary.

The following steps had already been anticipated by the PUBLIC and in a nutshell will be the constitution of the fund, the mounting and funding of the fund with the State guarantee, the signing of the contracts until the end of April and the release of the first tranche until May 31.

what is not explained

The "model of solution" have no details as to its operationalization. Is not provided with information about who will create the fund, just that it will assume the configuration of "a vehicle of private law". Will this fund to ask for money to the bank, that if all clients adhere will reach the amount of 286 million euros, but only refers to a guarantee from the State, with an eventual coverage of the Resolution Fund, which aggregates the major national banks, including Caixa Geral de Depósitos.And in relation to the dates of implementation are also not given guarantees, only estimates are desirable.

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