The European Central Bank (ECB) revoked the authorization of Banco Espírito Santo, SA ( “BES”) for the exercise of the credit institution activity, a formalism that allows proceed with the dissolution and liquidation of the so-called bank “bad” , the Bank of Portugal will put into practice.
When approaching two years of the implementation of the resolution of measure (3 August 2014), the Bank of Portugal (boP) point in a statement “that will require, under the law, with the competent court the start of the judicial BES settlement “.
Since the implementation of the measure of resolution, resulting in the creation of the New Bank, which took over the banking BES, the boP had prevented the bank “bad”, that is only the assets considered toxic or irrecoverable, to engage in any commercial activity, such as receiving deposits and granting credit.
settlement of the BES is required by law, in accordance with the provisions of paragraphs 1 and 2 of Article 5 of Decree-Law No. 199/2006, and will allow close accounts with creditors, including shareholders and debt holders. The settlement process can take many months.
In the statement, the Governor of the BoP, Carlos Costa, thanks “to the Board of Directors of BES, named after the resolution of 3 August 2014, the great dedication and competence demonstrated in the performance of their duties, in pioneering and particularly complex conditions. “
BES closed the year 2015 with losses of 2.6 billion euros, and the highest was up to due to the return of five non-subordinated debt issues (senior) totaling 2.2 billion euros, which had moved to the New Bank.
the assessment by Deloitte to the liquidation scenario BES (alternatively as the resolution was applied), concluded that the unsecured creditors would recover 31.7% of their claims. Thus, the resolution fund may have to compensate these investors, which include commercial paper holders.
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