It's official, Banco Espírito Santo has no money, putting at risk the pension payments made to its former directors, many of whom helped run the company into the ground.
The pensioned Directors have been costing €13.5 million a year with the retirement pay of Salgado coming as a nasty reminder to many who lost everything in the BES collapse that bankers look after themselves first and their customers last.
Ricardo Salgado has been under house arrest since July 25th, 2015 as part of investigations related to parts of Grupo Espírito Santo and now is involved in 12 criminal investigations.
The ‘bad bank’ BES reported last week that there was zero chance of any return of money to shareholders.
In a statement sent to the Portuguese Securities Market Commission (CMVM), BES which now is led by Luis Máximo dos Santos, revealed the balance at the 'bad bank' showed a rather large hole of €2.42 billion with a net loss of €8.95 billion on 4 August, 2014.
This has not stopped the pension arrangements with monthly payments arriving on time and in full to keep former BES director in the style to which they have become accustomed.
The responsibility for paying pensions to BES’ former directors was transferred to Novo Banco in a move by Bank of Portugal’s Carlos Costa intent on looking after those he was meant to be regulating at the expense of BES creditors.
The confirmed deficit means that there is no expectation that BES can ever generate a profit to pay off its losses, these simply are too large.
One of BES’ liabilities is the loan to BES of €834.6 million dollars (€760 million) from Oak Finance, the company set up by Goldman Sachs.
This massive loan famously was not transferred to Novo Banco despite assurances by the Bank of Portugal’s Carlos Costa in December 2014 that it would be, and that investors’ money therefore would be safeguarded.
As for the BES directors' pensions, these may now end as Novo Banco's soon-to-be new owners may well question why they in affect are paying a pension to the man that ran BES so badly that it collapsed and has to be bailed out pro tem by the Portuguese taxpayer.
