BES 'liabilities to the Directors' Pension Fund will be extinguished

ASF authorized the extinguishment of pension liabilities of the former executive directors of BES.

The BES Pension Fund will be extinguished and the assets will be distributed among the fund's beneficiaries, Jornal Económico learns.

Banco Espírito Santo's report and accounts for 2019 reveal that the Insurance and Pension Funds Supervisory Authority (ASF) authorized in June the extinction of the share of the pension fund's assets to be allocated to BES, which is in settlement, and the “amendment of the respective constitutive contract”. That is why your liabilities to the pension fund will be extinguished. The request to ASF was sent by BES, which has no money to endow the pension fund because it is in liquidation.

The 2019 report and accounts show that the Pension Fund has an insufficiency between the assets and the fund's liabilities in the amount of 49,32 million euros.

The BES Pension Fund included three different plans: the base plan, applicable to all workers, and which ensures benefits provided for in the ACTV; the complementary plan, applicable to the management staff, and which ensures benefits complementary to that provided for in the ACTV; and the executive committee plan applicable to members of the executive committee.

But over time, there have been successive reallocations between the share of BES and Novo Banco, with BES being the responsibility of the Pension Fund of former executive directors whose pension responsibility has not passed to Novo Banco and remained in the bad bank.

In the case of executive directors, in the act of resolution and creation of Novo Banco, on August 3, 2014, it was stipulated that the good bank was left only with the pension responsibilities of directors who had ceased their functions before 2012. The others who were executive directors between 2012 and 2014 would be the responsibility of BES, which for not having money to provide the pension fund asked for its extinction to the insurance supervisor.

“Pursuant to the decision of the Board of Directors of Banco de Portugal, of February 11, 2015, it clarified that the obligations entered into by BES vis-à-vis, among other people, the members of BES's management body, including those who exercised these functions four years prior to the creation of Novo Banco, and whose action or omission have been at the origin of [BES] 's financial difficulties (...) or have contributed to the worsening (...) and which have not been transferred to Novo Banco "remained at BES.

In order to execute this resolution, it was necessary to amend the constitutive contract of the BES pension fund and separate the responsibilities and assets allocated to the reform plan of the bank's executive committee. What was done in May 2015.

At BES, “the pension fund's financing responsibilities were maintained with the necessary contributions so that it can meet the pension and other benefits attributed to the directors, under the terms of the executive committee plan, for the directors in office at the date application of the resolution measure ”, says the report and accounts. Novo Banco is responsible for “the financing of the Pension Fund related to charges arising from other pension plans”, including the executive committee plan of the directors who were not in office at the date of resolution.

At the same time, Novo Banco filed a declaratory action in the central civil court of Lisbon, of simple appreciation, similar to the one that BCP put in place to verify the rule for the establishment of the Jardim Gonçalves pension. Novo Banco wants to know, for BES managers whose pension is under the responsibility of the Novo Banco Pension Fund, whether the court confirms that the maximum pension payment limit is the highest remuneration they earned when they were in active employment.

In 2017 an exhaustive analysis was carried out, through which it was concluded that there were rights acquired at Novo Banco “to whom the benefits were incorrectly attributed under the Executive Committee Plan”, the report refers in the notes attached to the accounts.

Before, on March 18, 2016, BES (in liquidation), Novo Banco and GNB Sociedade Gestora dos Pensões Funds made an application to ASF requesting the amendment of the constitutive contract of the pension fund, as a result of this it was created a pension sub-fund for BES, whose assets finance its liabilities.

But ASF's final decision did not arrive until June 16 this year. The decision is to authorize the amendment of the constitutive contract of the pension fund, whose signature should take place soon, according to BES, and the bank's liability in liquidation with the fund will be extinguished.

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