Novo Banco and Banco Best condemned to pay €200,000 to customer sold BES bonds

Court rules customer was hoodwinked; banks believe they will win on appeal

The Court of Póvoa do Varzim has ruled in favour of a customer who accused Novo Banco and Banco Best of hoodwinking him.

The customer wanted to invest €200,000. The time was ‘late 2014’, explains SIC, after the collapse of BES, and the ‘creation’ of the so-called ‘good bank’ Novo Banco with non-toxic assets of BES.

The customer made it quite clear that he wanted “low risk products that had nothing to do with Banco Espírito Santo”.

What happened was that he was actually sold bonds issued by BES – and a year later those bonds were among bonds ‘retroactively dumped’ by order of the Bank of Portugal: they were taken out of Novo Banco, and placed into what was left of BES (by then known as ‘the bad bank’)… and thus lost.

According to reports, the possibility that this could happen was in the small print. But the customer was certainly unaware of it, and now the court has ruled the banks breached their duty of information by not properly communicating this risk to him.

Explains defence lawyer Pedro Marinho Falcão: “These bonds, which are investment models were sold to our client as a safe investment because they were bonds issued by Novo Banco, already under the domain of the Portuguese State, and without investment risk.

“In truth (the contract) contained a clause that allowed the retransmission of the bonds to Banco Espírito Santo, and this is exactly what happened”.

As a result of the arbitrary dump (which took place during the 2015 festive season) when the bonds matured in July 2016, nothing was returned to the client. “Neither capital nor interest”, says SIC.

“BES, meanwhile, went bankrupt and to that extent our client who had been badly informed by the banking entity that had sold this financial product lost all the money he had invested,” Marinho Falcão added.

Seven years on and one court has struck out for justice. The two banks have not only been ordered to pay the fleeced investor his money back, but to do so with interest.

As SIC remarks: “It is a rare sentence in the banking universe in Portugal”.

Is it a victory though? This is the question. Both banks apparently believe the decision will be overturned on appeal – meaning the customer may never recover his money.

But Marinho Falcão sees the situation a little differently. He tells SIC he believes that other people who have lost money in very much the same way as his client (by being misinformed, and effectively told something “which was a lie”) may take courage from this judgement and initiate their own challenges through the courts.

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