“At this moment I think it is impossible that the government, as promoter of a solution, fails to keep to commitments” Ricardo Ângelo told Lusa News Agency.
Ângelo added that there have been developments since the solution was drafted in June by the working group set up by the government, after months of negotiations on a compensation mechanism that involved dozens of meetings between investors, the securities markets commission (CMVM) and the Bank of Portugal, mediated by the government.
Lusa has learned that a further meeting has been scheduled between the working group and the minister of finance, Mário Centeno, whose office has yet to rubber-stamp the solution. Ângelo, however, declined to confirm or comment on this.
The association says that any investors who bought commercial paper issued by Espírito Santo International and Rioforte (two key companies in the Espírito Santo group), must have started legal proceedings against the group and its directors by 3 August, in order to be deemed formal creditors. The deadline relates to the date two years ago when the Bank of Portugal wound up Banco Espírito Santo, spinning off a ‘good bank’, now renamed Novo Banco, to carry on the commercial business.
However, the CMVM stated in July that the range of different deadlines laid down in the law did not permit “the indication, of a general nature,” of deadlines for starting legal action by the victims and that it is necessary to carry out a “specific analysis of each situation”.
According to Ângelo, the number of legal actions by members of his association has surged in recent weeks, but no final figures are yet available.
There are believed to be more than 2,000 retail customers of BES who invested a combined €432 million in this way.
The information that has emerged about the negotiated solution for investors in commercial paper is that it would have to be accepted by 80 percent of them in order for a compensation fund to be set up partly to reimburse them for their losses.
As to how the fund is to be financed, the idea is that the money should come from the banking sector resolution fund, which would then receive a loan backed by the promise of compensation that might in future be ordered by the courts. If the latter amount was not sufficient, the resolution fund would have to take on the loss.
At present, however, the resolution fund does not have the capital to finance the compensation fund. Instead, it might come from the existing deposit guarantee fund - which would have to be refunded in full by the banking sector fund, whether it received money via court actions or not.
The government has since the start of this year made the matter of compensation for this group of investors a priority, on the basis that confidence in the financial system is at risk.