The Supreme Administrative Court held that the Banco Espírito Santo (BES) decision made by the BES in 2014 was not illegal as it did not violate the constitution, according to the decision to which Lusa had access.
We are talking about the appeals of several companies, namely international investment funds, and the insolvency of the Espírito Santo financial group (which was the parent company of BES) to the Supreme Court to consider several decisions of the Bank of Portugal in the BES resolution to be illegal, namely decisions that violate the Constitution of Portugal .
In a 224-page judgment dated March 9, which Lusa had access to and which Jornal de Negócios had already reported on that Monday, the judges decided that the discussions between the Bank of Portugal and the government (which at the time made changes to the regime of credit institutions) complied with the law without giving grounds to those who appealed against earlier court decisions.
The Supreme believes that there is nothing illegal in the decision of the Bank of Portugal to oblige BES to create reserves of 2,000 million euros, which, according to the ESFG, led to a loss of 3,500 million euros in the first half of 2014 and left the bank with capital adequacy ratios below the required ones. For the Supreme Court, contrary to what the ESFG claims, the BES ruling does not come from an enforcement of the provision.
With regard to declaring unconstitutionality Government Decree-Law No. 114-A/2014, which amended the Regime of Credit Institutions, since only the Parliament can authorize changes that imply the right to property, the Supreme Court considers that the changes made are not the exclusive competence of Parliament and do not limited the right to property without causing damage to it. Thus, the Supreme Court believes, “it cannot draw a conclusion about the organic unconstitutionality of the norms of the decree-law.”
Violations of the principles of equality, the right to private property and free private economic initiative are also rejected by the Supreme Court, starting with the way the decision on the division of assets was made, which led to losses for those who had subordinated obligations and shares. .
The Court reiterates in one of its arguments that the right of ownership does not imply the use of an asset as an absolute value, but that it is combined with other rights and that there was no expropriation, but permission “because of the need to prevent direct consequences/indirect consequences resulting from impending insolvency”.
He also says that in the case of all shareholders’ losses, it “would not be a direct consequence of the settlement measure”, but it was “their actions/inaction that contributed to the risk situation” of the bank’s failure.
The Supreme Court even considered in its decision that the clearance measure was “the only means to stop the indiscriminate liquidation and systemic risks of contagion.”
According to the decision, in August 2014 BES was the third largest bank in Portugal and the second largest private bank.