By Margot Patrick and Patricia Kowsmann 

LONDON-- Goldman Sachs Group Inc. and several of its clients stand to lose hundred of millions of dollars from a loan made to Banco Espírito Santo SA just weeks before the Portuguese lender collapsed in August, after the Bank of Portugal said the claim won't be honored by Novo Banco, the "good bank" carved out of BES.

Novo Banco said it was told by the Bank of Portugal last week that it wouldn't have to repay $835 million owed to financing vehicle Oak Finance Luxembourg SA, in a reversal of an earlier decision by the central bank. The loan will instead remain an obligation of the "bad bank" that kept the Banco Espírito Santo name and its worst assets.

Goldman Sachs, which set up Oak Finance and bought notes issued by the vehicle against the loan, said it plans on "pursuing all appropriate remedies."

As problems were mounting at the Portuguese bank and other companies linked to the Espirito Santo family last summer, Oak Finance made a $835 million, four-year amortizing loan to Banco Espírito Santo and issued notes against it in early July. The proceeds of the loan were earmarked for an oil refinery project in Venezuela that Banco Espírito Santo had previously agreed to finance, according to a prospectus.

When Novo Banco was carved out of Banco Espírito Santo on August 3, the Oak Finance-linked loan went with it. The Bank of Portugal and Novo Banco confirmed in writing that month to Goldman Sachs that the obligation would transfer to Novo Banco, according to a Goldman Sachs spokeswoman. Based on that same information, Moody's Investors Service affirmed a B3 rating on the Oak Finance notes on September 2.

"Four months ago, when Novo Banco was created, we sought confirmation from the Bank of Portugal that debts such as the Oak Finance obligations would be transferred to NB. On August 11, 2014, a senior representative of BoP explicitly confirmed to us in writing the transfer of these obligations. In addition, Novo Banco also confirmed in writing that Oak Finance had been transferred as one of its liabilities. The BoP's unexpected public announcement earlier this week to retroactively return these obligations contravenes market expectations and damages multiple investors, including pension funds, who were offered these investments in reliance on these prior representations. Absent the Central Bank's reconsidering its position in light of the damage it will be causing to our clients and financial markets, we plan on pursuing all appropriate remedies," the Goldman Sachs spokeswoman said.

A Bank of Portugal spokesman on Monday said the Oak Finance decision was made to comply with European rules that forbid a rescued bank to assume obligations from shareholders who own 2% or more of the entity. Goldman Sachs owned more than 2% of Banco Espírito Santo at the end of July, according to the spokesman and a filing that month by the American investment bank. The spokesman said the decision was announced to Oak Finance early last week after it was able to confirm Oak was indeed a Goldman Sachs vehicle.

Novo Banco was due to make its first repayment on the loan, for $52.9 million, on December 25, according to the Oak Finance prospectus. Under the terms of the deal, that money would then be used to make an initial repayment to the Oak Finance noteholders, including Goldman Sachs and a set of hedge funds and pension funds who bought the notes.

The Oak Finance transaction, first reported in The Wall Street Journal in September, raised eyebrows because of its timing so soon before the bank's collapse, and because of the circumstances of the loan.

According to the Oak Finance prospectus, the borrowed funds were for purposes including trade financing for China's Wison Engineering on a project for Venezuela's state energy monopoly Petróleos de Venezuela SA, or PdVSA, at its Puerto La Cruz refinery. PdVSA is a major holder of debt issued by Espirito Santo companies, much of which is now worthless, and is increasingly seen by investors as vulnerable to defaulting on its debt amid broader concerns about Venezuela's finances.

Removing the Oak Finance loan boosted the balance sheet of Novo Banco, which is in the process of seeking a buyer, by EUR548.3 million, according to a Dec. 23 statement by Novo Banco. The bad bank has limited assets that are unlikely to cover any substantial repayment of the Oak Finance loan.

Write to Margot Patrick at margot.patrick@wsj.com and Patricia Kowsmann at patricia.kowsmann@wsj.com

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