Portugal's PM says compensating commercial paper investors "vital" for market confidence

Portuguese Prime Minister Antonio Costa said on Thursday that compensating commercial paper investors hit by the collapse of the bank Banco Espirito Santo was vital for market confidence.

"In a decent society, it would not be acceptable to drag on a situation of people affected when it is possible to solve this now, without that implying risks for taxpayers and making those who should actually pay do so," he told journalists following a quarterly debate at parliament in Lisbon.

Costa's comments came after the government announced on Wednesday a solution to compensate commercial paper investors who lost money in the bank after it registered losses of around 3.6 billion euros (3.76 billion U.S. dollars) in August 2014. The bank had to be split into a "good bank" and "bad bank."

BES clients will recover between 50 percent and 75 percent of the money they invested, which will come from the country's bank resolution fund.

At least 4,000 customers, who had invested around 485 million euros, were affected by the bankruptcy, which led the government to have to inject around 4.9 billion euros into the bank.

The Portuguese prime minister has also said that compensating investors is vital for the country's economic stability.

On Wednesday, Costa said the country's deficit will be lower than the EU threshold of 2.5 percent in 2016. (1 euro = 1.04 U.S. dollars) Endit