State will appeal the decision of the London court on the swaps – Daily News – Lisbon

Portugal was ordered to pay 1.8 billion euros to Santander Totta. PSD says “feature makes sense”

The Portuguese state will appeal the decision of the London court, which declared valid swap contracts with Santander Totta. In a statement sent Tuesday to newsrooms, the Ministry of Finance writes that public enterprises Metropolitano de Lisboa, Porto Metro, Carris and STCP, who signed contracts with the bank, will present appeal against the decision.

the swap contracts were concluded between public companies and Santander Totta, and worth EUR 1.8 billion. The Commercial Court in London held on 4 March that the swap contracts are still valid after the interruption of payments in September 2013. The unilateral breach of the nine contracts, which were concluded between 2005 and 2007 led Santander Totta to proceed with a lawsuit against public companies.

PSD believes that feature “makes sense”

the deputy chairman of the parliamentary group of the PSD Sergio Azevedo today considered “normal” feature of the Portuguese State. “We note this attitude by the government. It is a decision, a normal mechanism for those who lose and you want to appeal an unfavorable decision and makes sense,” he said in parliament regarding the news published today on the intention of the socialist executive in relation to action which runs at the London commercial court.

the decision to terminate such contracts, giving rise to the complaint of the Santander-Totta with the British judicial authority, was taken by the government PSD / CDS-PP, led by Passos Coelho .

How to treat these contracts?

a swap is a hedging contract on financing that involves almost always losses to a party, as it is to fix an interest rate (which, otherwise, would be variable) of a loan with the obligation of a party to pay the difference between the fixed rate and rate swings. To address the uncertainty about the future of interest rates payable, a company can hire a swap with a bank that allows you to know what interest you have to pay.

In the case that opposed the bank Santander and the Portuguese State are concerned four contracts made by public transport companies – Lisbon Metro, Metro do Porto, STCP and Carris – worth 1.3 billion euros. The government claimed that the managers of these companies were unable to sign the contracts, asking why their nullity. A version contradicted by the bank resorting to the statements by some public officials in parliamentary committee of inquiry into the case, in which said proper notice had been given and not the Finance Inspection General or the Ministry of Finance had ever had any reservation “on the ability of public companies to hire swaps or on their validity or enforceability.”

the interest accrued for non-compliance of contracts already exceed 233 million euros.

With Lusa