Eight days after Puerto Rico’s federal oversight board sued 20 banks over fees tied to the government debt it claims illegal, Popular Inc. President and Chief Executive Officer Ignacio Álvarez confirmed that the institution signed a tolling agreement to extend the statute of limitations and avoid -for now- a lawsuit over its role as an underwriter of a $3.5 billion bonds emission in 2014.
“Yes, we signed a tolling agreement,” Álvarez said during a roundtable with reporters. “We are not included in the lawsuit yet because we signed the tolling agreement.”
The name of Puerto Rico’s largest bank was missing from the suit filed last Thursday prompting speculations about a possible consensual tolling agreement. Later, in a press conference, the board’s Executive Director Natalie Jaresko refused to answer if the federal entity had delayed filing a legal action against the bank due to a wavering of the terms or negotiation.
“The theory of the tolling agreement is that you get to have more time and maybe you can reach an agreement... but also the actions brought against you could be more limited,” Álvarez explained.
He also described the acts of the Financial Oversight and Management Board (FOMB) as “incorrect” and “wrong.”
“I think we're trying to blame everyone, except the one at fault: the government. Who borrowed the money? We are trying to blame everyone,” Álvarez replied to The Weekly Journal.
“Obviously, when the time comes we will defend ourselves in court. We think that we acted correctly. We are a small player in all those bond issues,” he added.
With the lawsuit against the banks and other financial firms, the FOMB seeks to claw back more than $1 billion in fees and interest payments of bonds issued in excess of Puerto Rico’s constitutional debt limit.
Some of the institutions sued include Barclays Plc, Merrill Lynch Capital Services Inc., Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Morgan Stanley, Santander SA, UBS Financial Services Inc. of Puerto Rico, Scotia MSD, and Bank of America Corp.
Read more on the CEO of Banco Popular roundtable on the next edition of The Weekly Journal.