Bank of Portugal to blame for BES fall due to gov't support: former BES chairman

The Bank of Portugal is to blame for the fall of Banco Espirito Santo (BES) for relying on government support, former BES chairman Ricardo Salgado alleged on Thursday.

Banco Espirito Santo was bailed out in August after a first-half net loss of 3.58 billion euros (about 3.9 billion U.S. dollars) and the bank's former chairman, Ricardo Espirito Santo Silva Salgado, was arrested for alleged tax fraud and money laundering.

He was detained in July last year but freed after paying a sum of 3 million euros.

In a 432-page document produced by law firm Uria Menendez-Proenca de Carvalho in response to an infraction proceeding opened by the Bank of Portugal, Ricardo Salgado said the BES would not have collapsed without the intervention of a regulator.

"BES didn't go bankrupt. It was forced to disappear by the Bank of Portugal, with support from the government, led by Mr. Pedro Passos Coelho," Salgado wrote in a document which local media had access to.

"The Bank of Portugal acted in this case as a kind of modern operational command, declaring a surname and everything it felt like toxic, removing from facades of buildings a brand with over 140 years of existence, immediately blaming the managers of the bank and initiating an infamous procedure of contamination of public opinion," he writes.

The BES crisis has been referred to by analysts as one of the country's biggest financial scandals, damaging the country's reputation less than four months after the country exited its bailout program without a credit line.

The bank was split into a "bad" bank which houses toxic assets and liabilities, and a "good" bank, which houses viable assets like branches, employees and senior debtors. The good bank is now called "Novo Banco" (New Bank).

The government has maintained an optimistic stance throughout the turmoil, claiming that bailing out BES was the "best solution" amid backlash by the opposition Socialist Party and Communist Party. Endit