LISBON--Switzerland's financial regulator urged that a
Portuguese guarantee to cover losses of bank clients who invested
in debt from the collapsed Espírito Santo Group be extended to
customers of a Swiss bank, but Portugal's central bank refused to
do so, an Espírito Santo official said Tuesday.
Banco Espírito Santo and Swiss Banque Privée Espírito Santo both
sold Espírito Santo debt to their customers. They were both part of
the Espírito Santo Financial Group, the Espírito Santo company that
held financial interests of the collapsed conglomerate.
In a parliamentary hearing, Jose Manuel Espírito Santo, who was
the head of Banque Privée Espírito Santo SA in Switzerland,
apologized to bank clients who lost their investments after the
Espírito Santo group collapsed.
"I'm profoundly sorry for what happened," Mr. Espírito Santo
said. Mr. Espírito Santo is the cousin of Ricardo Salgado, the
former chief executive of Banco Espírito Santo and the patriarch of
the family-controlled group.
Banco Espírito Santo collapsed and was then rescued in August
amid a high exposure to the group, which was found to be in a
serious financial situation. The group and many of its entities
have filed for bankruptcy.
Banque Privée Espírito Santo is in voluntary liquidation.
While Bank of Portugal told Espírito Santo Financial Group to
set aside EUR700 million to repay clients of Banco Espírito Santo
who had bought the group's debt, it left clients of banks outside
Portugal out.
Mr. Espírito Santo said he couldn't comment further on Banque
Privée Espírito Santo because the bank is under investigation by
the Swiss regulator.
In September, the Swiss Financial Market Supervisory Authority
said that it began proceedings that will examine whether Banque
Privée Espírito Santo's distribution of securities and financial
products violated rules designed to protect clients.
-Write to Patricia Kowsmann at patricia.kowsmann@wsj.com
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