Espirito Santo debts sold via Jersey
- 19 August 2014
- From the section Jersey
Three companies implicated in the downfall of the Portuguese bank, Banco Espirito Santo (BES), are registered in Jersey.
They bought debts from the bank, and other Espirito Santo companies, and repackaged them as investments for branch customers.
Following complaints, BES was made to refund the customers, contributing to a record £2.8bn half-year loss.
BES was eventually split into a "good bank" and a "bad bank" on 3 August.
According to a Wall Street Journal report, Portuguese regulators are now interested in three Jersey companies, or "Special Purpose Vehicles", and one in the British Virgin Islands, which they say are connected to the Espirito Santo conglomerate.
The companies named are Top Renda, EuroAforro Investments and Poupanca Plus Investments.
Hundreds of millions
Their alleged link to the Espirito Santos group is difficult to verify because Jersey companies can conceal their true beneficiaries by nominating local trust firms as shareholders.
The St Helier trust provider named in the companies' filings, Sanne Fiduciary Services, has not responded to requests for comment.
The filings of the three Jersey companies do show, however, that over the past ten years they bought hundreds of millions of euros worth of debt from Espirito Santo group companies.
To fund this, they sold many small batches of "preferred shares", which are a cross between shares and bonds. These are the products which had to be refunded.
Swiss bank Credit Suisse is named on the filings as the "arranger" of the deals.
Concerns over Banco Espirito Santo, and its exposure to other companies controlled by the reclusive Espirito Santo family, first arose in June.
Following the split, the "good bank" was part-nationalised, re-named Novo Banco, and bailed out with a £3.9bn loan from what remains of Portugal's financial crisis bailout fund.
The episode has affected banks in other countries and created uncertainty in Portugal's economy.