1. Following recent developments concerning Banco Espírito Santo, SA (BES), the CMVM would like to provide some clarification to shareholders, bondholders and financial services clients.
2. In its investor protection task, the CMVM should ensure that shareholders, bondholders and clients have all the information and make their investment decisions on the basis of clear, complete and accurate information. Over the last three months (between 1 May 2014 and 1 August 2014) material information for investors amounts to 160 information announcements from the Espírito Santo Group (GES). Furthermore, the CMVM ordered the suspension of BES shares from trading on four occasions (three for lack of information and one in order to give investors the time to examine information available to the market) and of Espírito Santo Financial Group (ESFG) on one occasion (for lack of information).
3. A particularly important point in time was that of the latest capital increase that was underwritten by a syndicate of international financial institutions and against which the CMVM made its approval of the prospectus conditional on an explanation of all relevant risks, including those relating to the situation concerning the main shareholders, insofar as they were known to the CMVM. A description of these risks appears in Chapter 2 of the prospectus, which was approved and published on the CMVM website on 20 May 2014.
4. In addition and prior to the end of the time period for the irrevocability of orders, the CMVM called for an information statement from ESFG on the respective situation, which was published on 28 May 2014.
5. The CMVM has no power with regard to decisions relating to an increase in the capital of any company. The decision to raise capital belongs to the shareholders, and in the case of credit institutions, requires approval from the Portuguese Central Bank (Banco de Portugal). Intervention by the CMVM is confined to approving the prospectus for the public subscription offer in the event that this form of subscription was decided by the shareholders. In approving the prospectus, the CMVM must check that all the relevant information on the company is provided in appropriate terms by the persons responsible for drafting and the content of the prospectus (e.g. Article 149 of the Portuguese Securities Code).
6. In addition to the information mentioned, during a public hearing in the Portuguese National Assembly on 24 July 2014, the Chairman of the CMVM had the opportunity of warning of upcoming new important information that was to be provided by the issuer with the publication - announced for 29 July 2014 - of the respective half yearly financial statements together with the corresponding audit report, as was the case.
7. Furthermore it is clarified, in the wake of decisions made by the Portuguese Central Bank and announced yesterday by the Governor with respect to Banco Espírito Santo, SA, an issuer of shares listed on the Euronext Lisbon market:
- Shareholders and bondholders that remain in BES:
1. Banco Espírito Santo, S.A., (BES) is still an issuer, whereof the shares remain listed for trading on Euronext Lisbon (although currently suspended);
2. BES remains liable for complying with the disclosure duties envisaged in the Portuguese Securities Code and CMVM Regulations, particularly as regards issuers that have securities admitted to trading on a regulated market;
3. As an issuer, BES should disclose relevant information to the market in accordance with the Law;
4. As soon as there is sufficient information, the CMVM shall consider whether to lift the suspension or delist the BES shares and bonds;
5. Having noted the decision by the Portuguese Central Bank concerning the establishment of the Novo Banco, SA, the CMVM began lifting all the implications of that decision for the BES shareholders and bondholders. Following this assessment, the CMVM shall provide any additionalclarifications deemed to be necessary to the shareholders and bondholders that remain at BES;
6. On the other hand, the CMVM started an in-depth investigation into the trading of BES securities, namely, on 1st August, in order to ascertain whether there is evidence of breach of the duty to protect the market and/or crime of insider trading until when the CMVM ordered the suspension of trading, which took place shortly after finding out about impending developments that came to be known over the weekend.
This investigation also joins those already cited by Chairman of the CMVM at the hearing before the Committee on Budget, Finance and Public Administration in the National Assembly, which took place on 24 June 2014.
7. The CMVM is also analysing compliance with the disclosure duties that the issuer is subject to;
8. In accordance with practice and pursuant to the law, the CMVM shall notify the Public Prosecution Service of any signs of criminal offences that was detected or may be detected when carrying out its supervision and investigation powers;
- Clients of investment services:
1. In accordance with the decision of the Portuguese Central Bank, the clients of investment services and respective ancillary services provided by BES are now with Novo Banco, SA, as from 4 August 2014;
2. In complying with the task of investor protection and within the scope of its powers, the CMVM will act in the sense that all the rights and commitments made to these clients are protected and honoured;
3. As soon as all the implications of the decision taken by the Portuguese Central Bank is clarified, the CMVM shall provide the clients of investment services with information that is relevant;
4. It is hereby stated to the holders of investment units in investment funds that the respective portfolio and assessment thereof reported on 31 July will be released on the CMVM's website, which will enable investors to assess the exposure of their portfolios to BES and GES and its progress in the past month.
The CMVM announces that it has made a toll-free number 800 205 339 available on business days to all shareholders and clients of investment services.
