Portugal’s Central Bank is being sued by 14 Fund Management Groups. These include Blackrock, TwentyFour AM, and Pimco no less. This issue is over losses from the Portuguese bank Novo Banco.

The Financial Times reports that Clifford Chance Solicitors are representing the 14.

Novo Banco was created in 2014 when the failed Banco Espirito was split into 2 parts.

£1.6 billion in Senior Bonds sold as investments in Novo Banco the new bank were transferred to the ‘bad bank’. This transfer was approved by the Portuguese Central Bank. This move meant the Senior Bonds became worthless.

Amazingly Portuguese retail investors who held similar Bonds did not have to bear any losses.

The legal challenge by the 14 Fund Managers is on the grounds of Nationalist Discrimination. Amongst its defence comments the Portuguese Central Bank said it had a “sovereign right”, to choose which of the creditors should suffer losses, in order to spare Portuguese domestic retail investors.

With voting in or out of The EEU only a month away, any countries “sovereign rights” is a moot point?