The Commercial Court of London ruled in April that the contracts sold by Totta were valid and that, therefore, the four companies of Portuguese state would have to pay the interest payments which do not pay since the “swaps” were to the court. The Government has decided to appeal, and this Tuesday, the 13th of December, it was known the decision, which confirms the first instance. The public companies have returned to lose. But the Ministry of Finance claims that it will appeal to the Supreme.
“The English court (Court of Appeal) decided in favour of Banco Santander Totta (BST) the appeal filed by the public companies Metropolitano de Lisboa, Carris, Metro do Porto and STCP, of the judgment of the court of first instance that had already recognized the validity of the nine contracts 'swap' agreements concluded between these companies and the bank,” reveals the bank led by Vieira Monteiro.
The press office of the Ministry of Finance states that the State (public companies) will appeal this decision of the English court. According to information obtained by Business, the State claims that the agreement can not escape the mandatory rules of international law Portuguese for contracts do not contain elements of internationality. In practice, Portugal insists on the idea that the trial should be done in the light of national law and not london.
The judicial process is on the nine instruments financial risk management but, at this moment, there are only eight. One of them, signed by Carris, reached maturity in March 2016. The resource is relative to the seven. These instruments of financial risk management had a market value negative eur 1.3 billion in June this year, the metros are the major contributors, according to data released by the Bulletin of the Business Sector of the State relative to the second quarter. This is the value of the market negative for the state-owned enterprises that they would have to pay if the swaps were void. This decision, however, does not invalidate the “swaps” – it only says that they are valid. That is, which have to be paid the interest that are missing.
Since, in 2013, the Totta was for the court to decree the validity of the “swaps” by itself sold to public companies, these, for the determination of the ex-minister Maria Luís Albuquerque, no longer pay the coupons associated with the contracts. Here there is a debt of 396 million euros in interest that are not being paid. In this moment, it is not possible to know if, with the new feature to the u.s. Supreme court, the public enterprises will continue without compensation to the bank for the interest of these “swaps”.
The bank has not recognized any provision for losses in these processes. Public companies, by contrast, were forming pads in case they have to face a higher cost with these instruments, as it was being reported by the press over the last few years. “Banco Santander Totta notes that the decision is unequivocal, waiting for now that they are honored the commitments in relation to swap contracts whose validity has been recognised by the English courts, in respect of international treaties and agreements to which the Portuguese State is obliged, without prejudice to the availability that the Bank has always had and continues to have to find a negotiated solution,” notes the bank in a statement.
The Totta was the only bank that had sold “swaps” to public companies that have not accepted an understanding with the State, represented by then secretary of State, Maria Luís Albuquerque, to cancel those type of instruments that, at the end of 2012, accounted for potential losses in the order of 3 billion euros to the State.
(updated News with more information at 12:43)
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