1. What are the consequences of applying this resolution measure for shareholders of Banco Espírito Santo, S.A.? Are the shareholders of Banco Espírito Santo, S.A. going to receive any compensation? The shareholders of Banco Espírito Santo, S.A. primarily bear the burden of losses arising from the financial imbalance of Banco Espírito Santo, S.A..
The fact that certain assets and liabilities of Banco Espírito Santo, S.A. have been transferred does not alone award its shareholders the right to any compensation.
Given that the business of Banco Espírito Santo, S.A. that has not been transferred to Novo Banco will form part of the judicial liquidation proceedings, any rights that shareholders may have must be exercised within the liquidation proceedings of Banco Espírito Santo, S.A. under the terms of the law. 2. Are the shareholders of Banco Espírito Santo, S.A. being expropriated? The resolution measure is not an expropriation. When situations threatening the stability of the financial system occur, the law empowers Banco de Portugal to reallocate a credit institution's assets, with legally defined limits and conditions.
In this case, the shareholders of Banco Espírito Santo, S.A. are no longer able to own assets and liabilities that have been transferred to Novo Banco, for the reasons and purposes given in response to Question A4.
By law, the shareholders may only be paid through judicial liquidation proceedings for the Banco Espírito Santo, S.A. business that has not been transferred to Novo Banco. Furthermore, under the subordination hierarchy resulting from the applicable legal and contractual provisions, this can only happen after all the other credits over the insolvency have been settled. 3. Shouldn't the shareholders have had the chance to make Banco Espírito Santo, S.A. viable and find a way to recoup the capital invested? Before the decision to apply this resolution measure, Banco de Portugal asked the management board of Banco Espírito Santo, S.A. to present a capitalisation plan bringing its own funds up to adequate solvency levels in the short-term through private financing. However the deterioration of the financial position of Banco Espírito Santo, S.A. and the uncertainty over its balance sheet made a capitalisation solution through private financing unviable in the short term (see Question B1). 4. Can shareholders oppose the transfer? Can they contest Banco de Portugal's decision? Under the legislation in force, the decision to transfer part of the business of Banco Espírito Santo, S.A. does not depend on prior consent from shareholders. However, the decision to apply the resolution measure is contestable, and shareholders may appeal this decision. |