NEW YORK Aug 17 Credit Suisse helped
put together billions of dollars in securities that were issued
by offshore investment vehicles and then sold to retail
customers of Portugal's Banco Espirito Santo SA , the
Wall Street Journal reported Sunday.
In the article in its online edition, the newspaper cited
corporate filings and people familiar with the situation, saying
customers didn't know the investment vehicles were loaded with
debt issued by various Espirito Santo companies and served as a
mechanism to finance the Portuguese conglomerate.
Credit Suisse was not immediately available for comment when
contacted by Reuters in Switzerland. WSJ.com said
representatives of Credit Suisse and Espirito Santo declined to
comment on the story.
Troubled Banco Espirito Santo is Portugal's second largest
bank. The Portuguese government said it will extend a loan of
3.9 billion euros ($5.2 billion) to the bank resolution fund in
charge of rescuing Banco Espirito Santo.
WSJ's website also said it was unclear about Credit Suisse's
direct role in selling the securities to bank customers.
Portuguese regulators investigating the Espirito Santo case
have identified at least four offshore investment vehicles whose
securities, mostly preferred shares, were sold with the help of
Credit Suisse to Espirito Santo customers, WSJ.com reported,
citing sources familiar with the investigation.
WSJ.com said three of the investment firms - Top Renda,
EuroAforro Investments, and Poupanca Plus Investments - are
based in Jersey, a tax haven in the Channel Islands.
According to corporate records filed with the Jersey
Financial Services Commission quoted by WSJ.com, Credit Suisse
served as "arranger and dealer" for those three vehicles, a role
that included not just underwriting securities but also handling
administrative and financial needs.
The fourth vehicle, EG Premium, is in the British Virgin
Islands, also a tax haven.
The people familiar with the investigation quoted by WSJ.com
said all four entities are controlled, at least in part, by
Swiss financial company Eurofin Holding SA, also partly-owned by
Espirito Santo until 2009 and has had close business ties to the
collapsed family-owned conglomerate.
The four investment firms invested primarily in debt issued
by Espirito Santo companies, including the Portuguese bank, its
Luxembourg-based parent and an Angolan mining and infrastructure
investment company called Escom, according to corporate filings
and internal Eurofin documents reviewed by WSJ.com
Credit Suisse had agreements dating back to the mid-2000s
with EuroAforro and Top Renda to handle the issuance of up to
$2.5 billion of each of their preference shares, WSJ.com
reported, citing corporate filings.
Those programs were still active as recently as last year,
the same filings showed. Credit Suisse also was responsible for
Poupanca's preferred-share sales, according to the filings.
The Swiss bank also paid the three vehicles' operating
expenses, including legal and audit fees and administrative
costs, WSJ.com said citing filings.
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Alice Baghdjian in Zurich; Editing by Sophie Hares)