Essential Business

Bank collapses left 14,000 creditors and €7.6Bn up in smoke

 In Banks, News

The collapse of three Portuguese banks 10 years ago left a trail of destruction with 14,000 creditors and €7.6Bn going up in smoke.

During the economic crisis that began with the collapse of Lehman Brothers in 2008 and Portugal’s sovereign debt crisis in 2011, the collapse of Banco Espírito Santo (BES), Banif and BPP left thousands of investors — small and large — without their savings or investments with little prospect of getting the monies back.
The number of customers, investors, suppliers and other creditors who are trying to get their money back reveal the sale of the disaster: 14,000 creditors have tried to claw back €7.Bn according to a report in the online news source ECO.
The collapse left almost no-one immune and affected all flanks of society: from small investors and customers (including émigrés and celebrities), many retired people who had their life savings in the banks and saw their money vanish from one day to the next, but also big International investors such as funds and investment banks.
In the wake of the tornado that ripped through Portugal’s financial system, taxpayers had to pick up the pieces: between 2008 and 2021 State help to support the banking system cost over €22Bn according to Portugal’s public spending watchdog Tribunal de Contas. Just the help to BES alone cost around €8Bn.
To get this into some context, it would have paid the €300 million for Lisbon’s planned new Todos os Santos hospital in Chelas plus the operating costs for several years. It also would have paid for Lisbon’s badly needed new international airport at €3-4Bn (depending on option and scope) and given the government money to pay down at least some of its accumulated state debt of €287Bn to around €269Bn.
From among the total number of creditors left penniless, 6,000 lost their money at BPP, 3500 at Banif, and under 5,000 at BES according to the Banks Liquidation Commission.
According to the newspaper Expresso, the Liquidation Commission recognises 3,510 creditors from Banif trying to reclaim €950 million, including the Resolution Fund that is trying to get back a €490 million loan that helped to support the winding up of the bank in 2015.
Today, what remains of Banif only has a net amount of €60 million (mostly tax credits) left, meaning that very few creditors will ever see the colour of their money again.
Banif was wound up in December 2015 when it was sold to Santander Totta for around €150 million. Its remaining assets are held by the asset management fund Oitante.
BPP, which collapsed in 2010, has a list of creditors numbering 6,000 who are trying to claw back €1.6Bn. The story is a long one, but ended tragically in South Africa in 2021 when its founder João Rendeiro committed suicide rather than face extradition and serve a lengthy prison sentence.
The remains of the bank’s assets are held in various portfolios, including two art portfolios – Ellipse Collection and BPP Collection – which in theory, all told have around €700 million available to pay creditors. But resulting funds can only be paid out when debts due to the Portuguese State are cleared.
BES has 5,000 creditors, most of them small investors, who have been seeking to get back €5Bn. But there are another bigger fish, such as overseas investors, and even the bank’s ex-chairman Ricardo Salgado who is facing court cases over his part in the collapse of the bank and the Espírito Santo Group.
Almost half of the amount owed to creditors comes from large international funds which are demanding €2.1Bn. The largest creditor is Pimco (€560 million), Goldman Sachs (€350 million) and Novo Banco (created from BES in 2014) with €277 million.
One ray of good news for the group of 1,800 savers who lost their savings when BES collapsed, known as ‘lesados’ or ‘financially prejudiced’ is that those who joined a mechanism set up with the help of the government have clawed back around 75% of their investments.

 


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