Bank of Portugal's Resolution Fund Books a €630 Million Reserve for Possible BES Compensation Claims

The body that has cleaned up after Portugal's banking failures has set aside 630 million euros to cover the possibility that it may one day have to compensate creditors of the collapsed Banco Espírito Santo (BES), the first time such a sum has surfaced in its accounts.

The provision appears in the 2025 report and accounts of the Fundo de Resolução (Resolution Fund), the state-backed vehicle that financed the 2014 rescue of BES and the creation of its "good bank" successor, Novo Banco. The fund is chaired by Luís Máximo dos Santos, who also serves as a vice-governor of the Banco de Portugal (Bank of Portugal), the central bank that manages it.

According to Máximo dos Santos, the reserve is "related to the possibility of the fund having to compensate certain common creditors of BES" under a legal safeguard known as the "no creditor worse off" principle. It is a precautionary entry rather than a confirmed liability: the money is ring-fenced in case courts ultimately decide that some creditors must be paid, not a sum the fund has agreed to hand over.

What the "No Creditor Worse Off" Rule Means

When Portuguese authorities split BES in 2014, they moved healthy assets into Novo Banco and left toxic exposures and certain creditors behind in the original bank, which was wound down. European bank-resolution law guarantees that no creditor caught in such a manoeuvre may end up worse off than they would have been under a normal insolvency. If a court finds that the orderly resolution left some BES creditors with less than a straightforward bankruptcy would have, the Resolution Fund is on the hook for the difference.

The 630-million-euro figure represents the fund's own estimate of that exposure as the BES liquidation process grinds through the courts. It is the first time the so-called "lesados do BES" (BES injured parties) have been reflected as a specific provision in the fund's books, signalling that the risk has matured from a theoretical possibility into one the auditors now require it to quantify.

A Long Bill Still Being Paid Down

The disclosure underlines how the 2014 collapse continues to shape Portugal's public finances more than a decade on. The Resolution Fund is financed largely by contributions from the country's banks, but it also borrowed from the state to cover the BES and, later, Novo Banco bills, leaving it with a debt to the Treasury that it is still repaying.

That repayment has been helped recently by recoveries from other failures: residual assets from Banif, the bank resolved in 2015, have flowed back to the fund and eased its obligations to the state. A fresh 630-million-euro contingency pulls in the opposite direction, reminding policymakers that the final cost of the BES affair remains uncertain.

For ordinary savers and depositors, the provision changes nothing immediately; Novo Banco operates normally and deposits are unaffected. But it is a marker of unfinished business. Successive governments have wrestled with how to treat the thousands of retail investors and bondholders left exposed by the BES failure, and the appearance of a concrete reserve suggests the courts may yet force a reckoning the state has spent years deferring.