Novo Banco is being sued for a business relating to Ricardo Salgado’s time. The fund in question has already received more than 120 million euros through operations with the bank.
Novo Banco is being sued by a Cayman Islands investment fund, CRC Credit, which demands compensation of more than 24 million euros, alleging fraudulent practices and conflict of interest. According to documents cited by , the fund accuses Novo Banco of making a “deal with itself”.
This case, which has been in court since April 2024, focuses on financial operations of Banco Espírito Santo (BES) during the leadership of Ricardo Salgado, involving mortgage loans sold to investors and managed by “vehicle companies” created for tax purposes.
According to CRC Credit, Novo Banco acted abusively by pre-liquidating funds in which this investment fund had a significant stake, triggering a refund that harmed investors.
The fund accuses the bank of manipulating the process, repurchasing mortgage loans at a value below market value, through an assessment carried out by its own auditor, EY. Alleges that there was a difference of 17.6 million of euros between the market value of the credits and the amount paid by the bank, resulting in losses for investors.
At the heart of the matter is the allegation that Novo Banco, by acting as a financial intermediary and manager of the funds, violated its fiduciary duty by deciding to early liquidate the funds and repurchase credits for yourself without carrying out a competitive sales process. CRC Credit sees this action as a “fraud of the law”, accusing the bank of acting in its own interest and failing to safeguard the rights of investors.
Novo Banco’s defense refutes these accusations, arguing that the operations were conducted in a transparent manner and that the use of “vehicle companies” served to protect the interests of investors, without any additional intervention or control. According to the bank, all operations respected legal standards and regulatory, and were conducted under the scrutiny of competent bodies.
The Portuguese bank also highlights that the securitization operations took place before the creation of Novo Bancobeing the responsibility of the former BES. Furthermore, it argues that the Portuguese court is not the appropriate forum for this dispute, as the contracts were subject to English jurisdiction and law.
