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Banco de Portugal approves decisions that complete the resolutionmeasure applied to BES 1. The Board of Directors of Banco de Portugal approved today a number of decisions that complete theresolution measure applied to Banco Espírito Santo, S.A..

2. Based on evidence that the economic and financial situation of Novo Banco, S.A. has been negatively affectedsince the date of its setting‐up by additional losses which are referable to events predating the resolution date,Banco de Portugal decided to confer again on BES the responsibility for certain issues of non‐subordinated bondsissued by the latter and intended for institutional investors, identified in the annex.

The nominal amount of the bonds retransferred to Banco Espírito Santo, S.A. totals 1,941 million euros andcorresponds to a balance‐sheet amount of 1,985 million euros. These bonds were originally issued by BancoEspírito Santo, S.A. and were specifically placed with qualified investors, with a minimum denomination of 100thousand euros.

The original resolution decision expressly provides that Banco de Portugal, as the Resolution Authority, in use ofits powers, may at any time re‐transfer assets and liabilities between Banco Espírito Santo, S.A. and Novo Banco,S.A..

This measure is necessary to ensure that, as stipulated in the resolution regime, the losses of Banco EspíritoSanto, S.A. are absorbed by this institution’s shareholders and creditors and not by the resolution fund or thetaxpayers.

The selection of the above‐mentioned bonds was based on public interest and aimed to safeguard financialstability and ensure compliance with the purposes of the resolution measure applied to Banco Espírito Santo, S.A.. This measure protects all depositors of Novo Banco, the creditors for services provided and other categories ofunsecured creditors.

Also, the measure does not affect bonds covered by agreements concluded between Novo Banco and itscustomers, nor issued bonds not included in the annex.

This measure has a positive impact, in net terms, on the equity of Novo Banco of approximately 1,985 millioneuros.

3. In addition to the measure mentioned above, Banco de Portugal made a final adjustment to the perimeter ofthe assets, liabilities, off‐balance‐sheet items and assets under management transferred to Novo Banco, namelyincluding:

a. Clarification that no liabilities have been transferred to Novo Banco that were contingent or unknownon the date the resolution measure was applied to Banco Espírito Santo, S.A.;

b. Retransfer to Banco Espírito Santo, S.A. of the shareholding in BES Finance, which is necessary to ensurefull compliance with and application of the resolution measure as regards the non‐transfer to Novo Bancoof subordinated debt instruments issued by Banco Espírito Santo, S.A.;

c. Clarification that it is the Resolution Fund’s responsibility, upon the fulfilment of certain conditions, tomake neutral for Novo Banco – through an appropriate measure – potential negative effects of futuredecisions, resulting from the resolution process and giving rise to liabilities or contingencies.

4. These decisions are the final and definitive adjustment of the perimeter of the assets, liabilities, off‐balance‐sheet items and assets under management transferred to Novo Banco, which is deemed definitively fixed. 

As a consequence, Banco de Portugal will ask the European Central Bank to withdraw the authorisation of BancoEspírito Santo, S.A., starting the judicial liquidation proceedings.

5. These decisions enable Novo Banco S.A. to focus exclusively on the implementation of its strategic plansubmitted in due time.

These developments, as well as the recent agreement with the European Commission on the commitments to beapplied to Novo Banco, remove uncertainties and make a positive contribution to the relaunch of the sale processof the Resolution Fund’s participation in the share capital of Novo Banco, S.A. in January 2016.

Annex

Bonds retransmitted from Novo Banco to BESISIN DESCRIPTION Currency Typo

PTBEQBOM0010 Senior bonds NB 6.875%, mat. July 2016 EUR Senior

PTBENIOM0016 Senior bonds NB 6.9% mat. June 2024 EUR Senior

PTBENJOM0015 Senior bonds NB 4.75% mat. January 2018 EUR Senior

PTBENKOM0012 Senior bonds NB 4.0% mat. January 2019 EUR Senior

PTBEQKOM0019 Senior bonds NB 2.625% mat. May 2017 EUR Senior

  Lisbon, 29 December 2015

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