Portugal Cuts Potential Swap Losses in Half to 1.5 Billion Euros

The Portuguese government reduced potential losses on derivatives contracts by approximately 1.5 billion euros ($2 billion) after reaching settlements with several banks, a finance ministry official said.

Potential losses dropped roughly in half from 3 billion euros, said the official who couldn’t be identified in line with government policy. Portugal said last week it reached a legal settlement with JPMorgan Chase (JPM) & Co. on derivatives contracts it had with state-owned companies.

The government hasn’t reached an agreement with Banco Santander SA (SAN)’s Portuguese unit, which sued the Oporto and Lisbon metro and bus companies in London over swaps contracts. Settlement talks are being held with Santander and could continue until a court ruling, the official said.

Cristina Dias Neves, a spokeswoman for Santander in Lisbon, said the talks were continuing.

The London cases are Banco Santander Totta SA v. Metro do Porto SA, High Court of Justice, Queen’s Bench Division, Commercial Court, 13-656. Banco Santander Totta SA v. Sociedade de Transportes Colectivos do Porto SA, High Court of Justice, Queen’s Bench Division, Commercial Court, 13-654. Banco Santander Totta, SA v. Companhia Carris de Ferro de Lisboa SA, High Court of Justice, Queen’s Bench Division, Commercial Court, 13-653. Banco Santander Totta SA v. Metropolitano de Lisboa EPE, High Court of Justice, Queen’s Bench Division, Commercial Court, 13-655.

To contact the reporter on this story: Anabela Reis in Lisbon at areis1@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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