Around 300 cases against Banco de Portugal and the Resolution Fund remain in court

Around 300 cases are currently in court against the Bank of Portugal and the Resolution Fund, challenging decisions taken during the BES resolution process, an official source at the banking supervisory authority and regulator told Lusa.

Ten years after the Banco Espírito Santo (BES) decision, Lusa questioned Banco de Portugal (BdP) about the dispute, which is still pending in court, as many legal decisions were taken that gave rise to lawsuits, mainly filed by investors from BES and GES (Espírito Santo Group).

In response, the BDP said that “almost three hundred cases remain pending, both against the Bank of Portugal and against the Resolution Fund.”

According to the BdP, what is at stake is essentially actions aimed at cancelling the Bank of Portugal’s discussions, in particular the cancellation of the discussions on the bailout measure and the cancellation of the discussions on the “retransfer” of the debt from Novo Banco to the BES.

There are also claims and lawsuits for civil liability or compensation related to the Novo Banco sales process.

Despite the high level of legal proceedings, the BDP stresses that to date the known verdicts “have been favourable to her”, meaning that she has not yet been ordered to pay any amount.

The BDP emphasizes the March 2023 decision in which the Supreme Administrative Court found that the BES regulation was not unlawful and declared the legal regime of the regulation constitutional.

BES disappeared on Sunday, August 3, 2014, and the news hit the scene with a bang that day, despite a string of scandals known to have plagued BES and other GES companies.

At around 11:00 p.m. that Sunday, then-BDP Governor Carlos Costa announced to the country an “urgent” solution to the BES problem.

BES became a “bad bank”, which retained assets considered “toxic” and deposits from administrators and family members. At the same time, a transition bank, Novo Banco, was created, into which “good” assets (many of which turned out to be problematic) and customer deposits were transferred.

The rapid and loud fall has put auditors, political authorities and, above all, regulators, especially the Bank of Portugal and its governor Carlos Costa, in the crosshairs.

In the months that followed, he would be accused of poor supervision, of not removing Ricardo Salgado (BES president) in time, of having led small shareholders and retail customers to trust the bank despite already knowing about the problems. Then came a slew of criticism from various parliamentary quarters, demonstrations by the aggrieved parties, and hundreds of court cases.

According to Lusa’s calculations, the BES bailout has cost the state treasury around 8 billion euros to date, mainly as a result of Novo Banco’s initial capitalisation and the recapitalisation carried out by Novo Banco’s Resolution Fund.

But the accounts are not closed. On the one hand, the Resolution Fund will have to pay BES creditors and assume any compensation ordered by the courts. On the other hand, when Novo Banco is sold, the Resolution Fund and the state will directly receive a share of the proceeds, an amount that will be deducted from the state’s expenditure on the BES settlement.

Ten years after the fall of BES, the main criminal case against Ricardo Salgado (BES/GES trial) is scheduled to open on October 15, in which he is accused of 65 crimes. In the criminal proceedings, about 2,000 affected clients have been granted victim status in court and are also demanding compensation.