Government approves 155 million more to pay BES victims

The Government approved the granting of a further 155 million euros to the credit recovery fund for the payment of the second and third tranches of the compensation to the injured BES.

“I authorize the granting of the State guarantee to the fulfillment of the responsibilities to be assumed by the FRC [Credit Recovery Fund] (…) in the total amount of up to 155,897,500”, reads in the order signed by the Assistant Secretary of State and Finance, Ricardo Mourinho Félix, published this Friday in “Diário da República”.

The document also states that “the guarantee requested ensures compliance with the obligations to be assumed in contracts to be concluded by FRC – INQ – Papel Commercial ESI and Rio Forte with its participants (adhesion contracts), being indispensable to guarantee the payment of 2 3rd and 3rd installments, “which will happen” within one year and two years, respectively, from the date of payment of the first installment of the price, to happen in 2018 “.

As for the amount for the payment of the first tranche of compensation to the injured, this was already published in “Diário da República” on January 20, worth up to 145,116,000 euros.

These amounts are intended to pay damages to the approximately two thousand customers who bought 400 million euros in commercial paper at Banco Espírito Santo branches (BES) and whose investment was lost when the bank and the Espírito Santo Group fell. GES) in the summer of 2014.

Initially, the fund was expected to be financed from several banks to pay the injured, using a state guarantee.

However, this idea was abandoned, as announced last December 30 the Deputy Secretary of State and Finance, Mourinho Felix, who said the state decided to lend money directly to the fund, instead of the guarantee.

The solution found (among the Association of Injured, Government, Securities Market Commission – CMVM, Bank of Portugal, Bad BES and New Bank) for those injured in commercial paper proposes that they recover 75% of the amount invested, at a maximum of 250 thousand euros, if they have applications up to 500 thousand euros.

Already above this amount, they will recover 50% of the value.

As for the payment, this will be done by the credit recovery fund, which must pay 30% of the compensation to the injured (about 140 million euros) soon after signing the contract of adhesion to the solution. The remaining amount will be paid to the injured in two more installments in 2018 and 2019.

In exchange for receiving damages, the injured parties will transfer to the fund the credits they have over BES and entities related to the bank, so that it is litigating in court against the bank for damages caused.

If the courts decide in favor of the injured, it will be the recovery fund for claims receivable.

The solution for commercial paper customers was a promise from Prime Minister António Costa and was presented at the end of 2016. However, the process has dragged on and the first compensation for the injured is still to be paid.

Source: trywebknowledge.com