Portugal’s stock market regulator raided at least three Novo Banco branches today in a search for documentation related to the sale of commercial bonds in Grupo Espírito Santo companies to clients of BES.
The searches follow official complaints from angry BES customers who were advised to buy the bonds by trusted BES bank despite the bonds being in highly risky Group companies. Many of these companies have collapsed and others are insolvent.
The regulator has received hundreds of complaints about the provision of false information to BES customers.
The other major sin was for bank staff to continue to sell bonds in Group companies after the Bank of Portugal had specifically banned this activity.
During Carlos Costa's second hearing by the parliamentary commission looking into the BES collapse, the the Governor of the Bank of Portugal said that customers who have been victims of irregularities may have the right to claim their money back from BES.
Not much help as it went bust but there may be a small percentage pay out after all assets are liquidated.
What the governor is desperate to avoid is any claim passing to Novo Banco, which is up for sale, or for the government to be held responsible for the lack of supervision and intervention by the Bank of Portugal and having to pay out over €500 million to the bondholders.
Costa said that any complaints should be made to the stock market regulator, thus deeply annoying its chief Carlos Tavares who sees the whole affair as being one caused by a lack of supervision by the Bank of Portugal.
However, if Tavares can uncover documents at Novo Banco branches that prove that staff were acting illegally under pressure from the bank’s management, this will be further evidence that Ricardo Salgado’s management grasp was slipping as the bank went under and that the Bank of Portugal should have addressed its concerns, rather than warning its chums to sell BES group company shares which all were about to explode in their hands.
