The Bank of Portugal (BdP) has published a new circular establishing the procedures for calculating and distributing compensation to creditors of the former Banco Espirito Santo (BES).
The directive operationalizes the 'No Creditor Worse Off' (NCWO) principle, ensuring that those affected by the 2014 bank resolution receive treatment no less favorable than they would have under a standard insolvency process.
This regulatory step marks a significant administrative milestone in the aftermath of one of Europe's most complex banking failures.
The NCWO principle is a cornerstone of the EU Bank Recovery and Resolution Directive, designed to protect creditor rights while allowing authorities to resolve failing banks without triggering systemic contagion.
By defining the specific calculation methodologies and procedural steps, the BdP aims to provide legal certainty and reduce the risk of prolonged litigation from former stakeholders.
The resolution of BES in 2014 involved the creation of Novo Banco to take over the healthy assets of the failed lender, while the remaining liabilities were managed through a bridge bank structure.