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Press release of Banco de Portugal regarding the withdrawal of authorisation from the Branch in Portugal of Banque Privée Espírito Santo

Banco de Portugal (BdP) has withdrawn the authorisation from the Portuguese Branch of Banque Privée Espírito Santo (BPES), a credit institution with its head office in Switzerland. The decision by the Board of Directors of BdP implies the winding-up and liquidation of this entity.

The decision is based on the reduction of activity of the Branch to a negligible level for a period of over six months, under the terms of the provisions in Article 22 (1) (d) of the Legal Framework of Credit Institutions and Financial Companies (hereinafter the “RGICSF”), as applicable under the terms of Article 57 (1) of the same Legal Framework.

It should be highlighted that since 19 September of last year, as a result of the insolvency proceedings initiated by the Swiss Financial Market Supervisory Authority (FINMA) against BPES –with head office in Switzerland – the Portuguese Branch of this institution has been the object of a number of corrective measures ordered by BdP. These measures have meant, in effect, that this institution has been forbidden from granting any new loans, applying funds in assets of any form, and taking deposits, and BdP has appointed interim members for the board.

Therefore, since the end of June 2014, the Branch’s activity has been gradually reduced to its currently negligible levels, no longer performing the normal functions associated with banking, instead focusing its activity on satisfying all its financial commitments in Portugal in order to comply with Article 54 of the RGICSF and its future winding-up.

The deposits held by customers of the Branch have been fully repaid and the value of the securities under the Branch’s custody has been reduced to residual amounts since September 2014, with client portfolios being transferred to other credit institutions or financial intermediaries as indicated by those customers.

Regarding the Branch’s own assets, it should be highlighted that loans granted to customers have fallen by approximately 60 per cent since September 2014 as a result of debt recovery operations undertaken, and the institution holds an amount of liquidity which will fully cover the forecast costs resulting from the winding-up proceedings. It is also anticipated that the institution will perform additional net recovery of most of its credit portfolio.  

Approximately one year ago, BdP successfully ringfenced the assets of the Branch, under the terms of Article 54 of the RGICSF, in order to satisfy primarily its Portuguese creditors. Having resolved the fundamental problems of the institution, its authorisation has been now withdrawn, as the interests of the customers of the Branch in Portugal have been largely satisfied. Repayments to customers – representing a merely symbolic amount – as well as the transfer of customers’ asset portfolios to other institutions have been practically concluded.

Under the terms of the applicable Portuguese legislation, this withdrawal of authorisation has the effects of a declaration of insolvency, resulting in the judicial winding-up and final liquidation of the Branch, with effect from 12 noon on 21 September 2015, in compliance with Article 5 (3) of Decree-Law No 199/2006 of 25 October 2006, which regulates the winding-up and liquidation of credit institutions and financial companies.

The liquidation proceedings shall be filed with the Lisbon Commercial Court.

Lisbon, 25 September 2015