NEW YORK (Reuters) - Credit Suisse helped put together billions of dollars in securities that were issued by offshore investment vehicles of Banco Espirito Santo SA and then sold to the Portuguese bank's retail customers, the Wall Street Journal reported on 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.
When contacted by Reuters, Credit Suisse in Switzerland said it had no comment on the story. WSJ.com said representatives of Credit Suisse and Espirito Santo declined to comment on the article as well.
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 cited 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 and Eric Walsh)
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