Financial Times claims “magic circle” law firm will be attacking Bank of Portugal

Doggedly clinging to his position as Governor of the Bank of Portugal, Carlos Costa has learnt that 14 of the world’s “biggest asset managers” have combined forces to accuse his institution of violating key banking principles. BlackRock, Pimco, Pioneer Investment Management, Twentyfour Asset Management and 10 others have hired “magic circle” law firm Clifford Chance in a bid to get their money back from BdP’s controversial resolution of BES.

As the UK’s Financial Times explains, the lawsuit is pitting international investors against a national bank regulator “in an age of increasing uncertainty for European bank bondholders who are expected to take losses when banks fail”.

BdP’s handling of the BES/Novo Banco scenario has seen both the government and the ECB distance itself from the resolution – has damaged the lives of endless ‘small investors’ – is the subject of all kinds of other lawsuits and could very easily affect the way Portuguese assets are viewed by international investors in future.

Clifford Chance is thus the perfect choice of a law firm that could turn things round. “Magic circle” in this context means “top notch” – but with the connotation that they can also pull a few rabbits from the hat.

Nonetheless, the FT explains BdP is also represented by a “magic circle” firm, Allen & Overy.

One of the tenets of the asset managers’ case is that BdP showed “discrimination on the grounds of nationality” in its retroactive €2 million bond dump, in which it surgically chose which senior to consign to the scrapheap.

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