Goldman Sachs threatens to bring charges against Bank of Portugal

Lisbon, Dec 27 (IANS) Goldman Sachs Friday warned it might bring charges against the Bank of Portugal’s decision not to transfer Banco Espirito Santo (BES) debt to Novo Banco.

Goldman Sachs made a loan to BES when it became bankrupt in August and could not lend from capital markets, through Oak Finance Luxembourg SA, Xinhua reported.
“The Bank of Portugal’s unexpected public announcement earlier this week to retroactively return these obligations contravenes market expectations and damages multiple investors, including pension funds, who were offered these investments in reliance on these prior representations,” Goldman Sachs said in a note.
“On August 11, 2014, a senior representative of the Bank of Portugal explicitly confirmed to us in writing the transfer of these obligations. In addition, Novo Banco also confirmed in writing that Oak Finance had been transferred as one of its liabilities,” the note added.
BES was rescued by the Portugal government in August under a 4.9-billion-euro (about $6 billion) bailout plan. The bank’s healthy assets were transferred to the “Novo Banco”, so- called “good bank”.
Goldman Sachs said the damage the Central Bank’s position will cause its clients and financial markets means it will be forced to pursue remedies against the bank.