New Bank: 14 investors will sue Bank of Portugal – TSF Online

14 institutional investors process the Bank of Portugal, to try to recover the investments made in the New Bank, says the Financial Times.

the Financial Times reports today that 14 institutional investors hired lawyers of British Clifford Chance to process the Bank of Portugal for having violated key principles and to recover the investments made in the New Bank.

the British newspaper says in the edition ‘online’ that BlackRock and Pimco funds are among 14 institutional investors who will challenge the decision of the Bank of Portugal made at the end of last year to impose losses on holders of senior bonds of the New Bank .

the legal process of institutional investors against the Portuguese central bank comes at a time of increasing uncertainty for holders of bank bonds, which will lose the entire investment if the institution goes bankrupt.

the new bank was created in 2014 after the bankruptcy of Banco Espírito Santo (BES), whose toxic assets were placed in a ‘bad bank’.

at the end of December last year, five lines of senior notes , sold as investments of around two billion euros New Bank were placed on the ‘bad bank’.

the move, which was approved by the Bank of Portugal, shook capital markets in Europe with many obligations banks in peripheral European countries to devalue heavily.

Both the European Central Bank and the Portuguese government have distanced themselves from the decision, the paper said.

These institutional investors also complain they have been discriminated against by nationality because they claim that holders of similar obligations Portuguese investors do not record losses, says the Financial Times.

on 10 January, about three dozen individuals with obligations that were transferred from New Bank for Banco Espirito Santo were the Association of bondholders private Senior aggrieved New Bank.

at the meeting where it was decided that association participated private bondholders across the country, including one of Ponta Delgada, as well as other Portuguese residents Mexico, Spain, Belgium, Germany and China, who have lost at least three million euros.

on 29 December, the Bank of Portugal determined relay to BES liability the obligations unsubordinated by this issued and that were aimed at institutional investors (such as investment funds, public or private), a total of 1,985 million euros

this measure -. which reversed what had been taken after the resolution of BES, when the boP decided not to allocate losses to senior creditors and will no subordinated debt BES to the new Bank – the capital of the new bank was strengthened by 1,985 million euros, allowing you to meet the requirements regulations.

However, despite these emissions have been originally intended for institutional investors came to doubt whether they would not have been sold to individuals and what would happen in this case.

the institution led by Carlos Costa came the explanation: “the relay for the BES [BES], SA covers all bonds issued under those ISIN (whose issue was addressed to qualified investors), regardless of the ownership of securities at 29 December 2015, “said an official source Bank of Portugal Lusa at that time.

Now, individuals who however have been with these obligations may have to bear losses, since the” responsibility for repayment and the payment of those obligations became Banco Espírito Santo “

what happens is that the BES. – the ‘bad bank’ which got the so-called ‘toxic’ assets of the former BES – should have no means of ensuring the repayment of the principal and pay the interest of the obligations in question, so investors these obligations risk losing the money.

in 2014, the ‘bad bank’ BES had losses nine billion.