The Bank of Portugal, in its capacity as Portugal’s central bank and statutorily empowered to manage the BES resolution, approved an additional measure to those applied to BES in conjunction with the resolution reached on 3 August 2014 which prevented the bank from continuing its banking activity and transferring to a new bank – Novo Banco – what were considered the non-toxic assets, rights, banking operations and liabilities of BES.
Part of the liabilities then transferred to Novo Banco included a number of non-subordinated bonds previously issued by BES to be subscribed by institutional investors.
Due to Novo Banco’s current financial situation, the central bank decided to retransfer to BES, still awaiting its liquidation, a number of those bonds totalling a par value of 1,941 million euros.
The central bank understands this new measure to be necessary with the view to keeping in BES original liabilities to be borne by BES shareholders and claimants and not by the banking system and taxpayers via Novo Banco.
It is believed that this complementary measure completes the preparatory operations regarding the final liquidation of BES and that it improves the financial status of Novo Banco regarding its further privatisation.
Despite the central bank did retain the authority to change the resolutory conditions exercised when decided to keep BES as the “bad bank” and Novo Banco as the “good bank”, the decision to transfer bonds from the latter one to the former one is raising reactions from and disagreement among the bond owners.