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REFILE-UPDATE 2-Dubai regulator freezes deposits in local Espirito Santo bank
September 18, 2014 / 9:02 AM / 3 years ago

REFILE-UPDATE 2-Dubai regulator freezes deposits in local Espirito Santo bank

(Adds statement from Dubai Financial Services Authority in fifth paragraph and further detail in 10th paragraph. Refiled to remove repetition of background details.)

* Dubai regulator restricts ES Bankers (Dubai) Ltd - statement

* Stopped taking, paying deposits to preserve assets

* Latest global action following collapse of Espirito Santo Group

DUBAI, Sept 18 (Reuters) - The Dubai Financial Services Authority (DFSA) said on Thursday it was freezing deposits and imposing other restrictions on private banker ES Bankers (Dubai) Ltd (ESBD), part of the Portuguese Espirito Santo family’s troubled empire.

The move is the latest in a series of international regulatory actions taken against Espirito Santo interests since Portugal’s largest listed lender, Banco Espirito Santo, was rescued by the state last month.

ESBD, which is owned by the Espirito Santo Financial Group , has now been restricted from taking or paying deposits, and it is required to maintain and preserve its assets, the DFSA, which is the regulator for the Dubai International Financial Centre (DIFC), said in statement.

The DFSA said ESBD’s operations and solvency had been “seriously compromised”, and that it was acting to protect the interests of depositors and other clients of the bank.

In a separate statement sent to Reuters, the DFSA said it was looking closely into the relationship between ESBD and the wider Espirito Santo Group of companies. It said there was a risk of financial loss to ESBD and its clients.

The regulator had already taken steps after the “rapid onset of financial difficulties” at the wider group, including placing restrictions on transfers of assets to other Espirito Santo companies and requiring a manager to act in place of the board of directors of the Dubai business effective Aug. 11.

As a DIFC bank, ESBD is not permitted to deal with retail clients or accept deposits from United Arab Emirates clients,.

The action was taken because of the failure of Banque Privee Espirito Santo (BPES), a Swiss-domiciled bank also owned by Espirito Santo Financial Group, to honour contractual commitments to ESBD and to repay deposits owed to ESBD, the DFSA said.

Deloitte has been hired to work towards a possible sale of ESBD’s assets, a source told Reuters. Nobody immediately responded to a telephone call or email to Deloitte.

Switzerland’s financial regulator said on Sept. 3 it was investigating Banque Privee Espirito Santo, which is undergoing voluntary liquidation, with a focus on its role in distributing securities and financial products to the wider ES group. (1 US dollar = 0.7744 euros) (Reporting by Tom Arnold and Andrew Torchia; Editing by David French and Greg Mahlich)

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