Bond BES Finance Ltd 3.468% ( XS0210172721 ) in EUR

BES Finance Ltd

79.69 % ⇌

Portugal

XS0210172721 ( in EUR )

3.468% per year ( payment 1 time a year)

06/02/2035

Prospectus brochure of the bond BES Finance Ltd XS0210172721 en EUR 3.468%, maturity 06/02/2035

1 000 EUR

104 389 000 EUR

07/02/2025 ( In 289 days )

The Bond issued by BES Finance Ltd ( Portugal ) , in EUR, with the ISIN code XS0210172721, pays a coupon of 3.468% per year.
The coupons are paid 1 time per year and the Bond maturity is 06/02/2035

PROSPECTUS
Banco Espi´rito Santo, S.A.
(Incorporated with limited liability in Portugal)
(acting through its head office or its Madeira Free Trade Zone branch or its Cayman Islands branch)
and
BES Finance Ltd.
(Incorporated with limited liability in the Cayman Islands)
unconditionally and irrevocably guaranteed by
Banco Espi´rito Santo S.A.
(Incorporated with limited liability in Portugal)
(acting through its London branch)
e10,000,000,000 EURO MEDIUM TERM NOTE PROGRAMME
This Prospectus supersedes the Offering Circular dated 6th August, 2004 and any previous Offering Circular or supplements thereto and is
valid for the purpose of the listing of Notes on the Luxembourg Stock Exchange, for a period of one year from the date of publication. Any Notes (as
defined below) issued under the Programme on or after the date of this Prospectus are issued subject to the provisions herein. This Prospectus does not
affect any Notes already issued.
Under the E10,000,000,000 Euro Medium Term Note Programme (the ` Programme''), each of Banco Espi´rito Santo S.A. (the ` Bank'' or
``BES''), acting through its head office or its Madeira Free Trade Zone branch or its Cayman Islands branch, and BES Finance Ltd. (``BES Finance' and,
together with the Bank in its capacity as an issuer of Notes under the Programme, the ``Issuers'' and each an ``Issuer'') may from time to time issue notes
(the ` Notes'', which will include Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes (as such terms are defined below))
denominated in any currency agreed between the Issuer of such Notes (the ``relevant Issuer'') and the relevant Dealer (as defined below).
The payments of all amounts owing in respect of the Notes issued by BES Finance will be unconditionally and irrevocably guaranteed by the
Bank, acting through its London branch, pursuant to the Trust Deed (as defined herein).
The Final Terms (as defined below) for each Tranche (as defined on page 34 below) of Notes will state whether the Notes of such Tranche are
to be (i) senior Notes which, in the case of Notes issued by BES Finance, will be guaranteed on an unsubordinated basis (``Senior Notes''), (ii) dated
subordinated Notes which, in the case of Notes issued by BES Finance, will be guaranteed on a subordinated basis (``Dated Subordinated Notes'') or
(iii) undated subordinated Notes which, in the case of Notes issued by BES Finance, will be guaranteed on a subordinated basis (``Undated Subordinated
Notes'').
The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed E10,000,000,000 or
such greater amount as may be agreed from time to time in accordance with the terms of the Programme Agreement (or its equivalent in other currencies
calculated as described herein).
The Notes may be issued on a continuing basis to one or more of the Dealers specified on page 4 and any additional Dealer appointed under the
Programme from time to time, which appointment may be for a specific issue or on an ongoing basis (each a ``Dealer'' and together the ` Dealers'').
References in this Prospectus to the ``relevant Dealer'' shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer,
be to all Dealers agreeing to purchase such Notes.
An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks see ` Risk Factors''.
Application has been made to the Commission de Surveillance du Secteur Financier (the ``CSSF'') in its capacity as competent authority
under the Luxembourg Act dated 10th July, 2005 on prospectuses for securities to approve this document as a base prospectus. Application has also
been made to the Luxembourg Stock Exchange for Notes issued under the Programme to be admitted to trading on the Luxembourg Stock Exchange's
regulated market and to be listed on the Luxembourg Stock Exchange. Notice of the aggregate nominal amount of Notes, interest (if any) payable in
respect of Notes, the issue price of Notes and any other terms and conditions not contained herein which are applicable to each Tranche of Notes will be
set forth in the final terms (the ` Final Terms'') which, with respect to Notes to be listed on the Luxembourg Stock Exchange, will be filed with the CSSF.
The Programme provides that Notes may be listed or admitted to trading, as the case may be, on such other or further stock exchanges or
markets as may be agreed between the relevant Issuer, and the relevant Dealer. Each Issuer may also issue unlisted Notes.
The Notes of each Tranche will (unless otherwise specified in the applicable Final Terms) initially be represented by a temporary global Note
which will be deposited on the issue date thereof with a common depositary for Euroclear Bank S.A./N.V. as operator of the Euroclear System
(``Euroclear'') and Clearstream Banking, socie´te´ anonyme (` Clearstream, Luxembourg'') and/or any other agreed clearing system and which will be
exchangeable, as specified in the applicable Final Terms, for either a permanent global Note or Notes in definitive form, in each case upon certification as
to non-U.S. beneficial ownership as required by U.S. Treasury regulations. A permanent global Note will be exchangeable for definitive Notes, upon
request (unless otherwise specified in the applicable Final Terms), all as further described in ` Form of the Notes'' below.
The relevant Issuer, the Bank, acting through its London branch, (where the relevant Issuer is BES Finance) and the Trustee may agree with
any Dealer that Notes may be issued in a form not contemplated by the Terms and Conditions of the Notes herein, in which event a supplementary
Prospectus, if appropriate, will be made available which will describe the effect of the agreement reached in relation to such Notes.
Arranger
LEHMAN BROTHERS
Dealers
BANCO ESPI´RITO SANTO
BARCLAYS CAPITAL
CALYON CORPORATE AND INVESTMENT BANK
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANK
DRESDNER KLEINWORT WASSERSTEIN
GOLDMAN SACHS INTERNATIONAL
HSBC
JPMORGAN
LEHMAN BROTHERS
MERRILL LYNCH INTERNATIONAL
MITSUBISHI UFJ SECURITIES INTERNATIONAL PLC
SOCIETE GENERALE CORPORATE & INVESTMENT BANKING
UBS INVESTMENT BANK
UNICREDIT BANCA MOBILIARE
The date of this Prospectus is 7th December, 2005.

This Prospectus comprises a base prospectus for the purposes of Article 5.4 of Directive
2003/71/EC (the ``Prospectus Directive'').
RESPONSIBILITY STATEMENT
Each of BES Finance and the Bank accepts responsibility for the information contained in
A11.1.1
this Prospectus. To the best of the knowledge of BES Finance and the Bank (each having taken all
A5.1.1
A5.1.2
reasonable care to ensure that such is the case), the information contained in this Prospectus is in
A11.1.2
accordance with the facts and does not omit anything likely to affect the import of such information.
A12.1.1
A12.1.2
A4.1.1
This Prospectus is to be read in conjunction with all documents which are deemed to be
A4.1.2
incorporated herein by reference (see ``Documents Incorporated by Reference'' below). This
Prospectus shall be read and construed on the basis that such documents are incorporated and
form part of this Prospectus.
Neither the Dealers nor the Trustee have separately verified the information contained
herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and
no responsibility or liability is accepted by the Dealers or the Trustee as to the accuracy or
completeness of the information contained in this Prospectus or any other information provided by
BES Finance or the Bank in connection with the Programme or the Notes or their distribution. The
statements made in this paragraph are made without prejudice to the responsibility of BES Finance
and the Bank under the Programme.
No person is or has been authorised to give any information or to make any representation
not contained in or not consistent with this Prospectus or any other information supplied in
connection with the Programme or the Notes and, if given or made, such information or
representation must not be relied upon as having been authorised by BES Finance, the Bank, the
Trustee or any of the Dealers.
Neither this Prospectus nor any other information supplied in connection with the
Programme or any Notes (i) is intended to provide the basis of any credit or other evaluation or
(ii) should be considered as a recommendation or constituting an invitation or offer by BES Finance,
the Bank, the Trustee or any of the Dealers that any recipient of this Prospectus or any other
information supplied in connection with the Programme or any Notes should purchase any Notes.
Each investor contemplating purchasing any Notes should make its own independent investigation
of the financial condition and affairs, and its own appraisal of the creditworthiness, of BES Finance
and/or the Bank.
The delivery of this Prospectus does not at any time imply that the information contained
herein concerning BES Finance and/or the Bank is correct at any time subsequent to the date
hereof or that any other information supplied in connection with the Programme is correct as of any
time subsequent to the date indicated in the document containing the same. The Dealers and the
Trustee expressly do not undertake to review the financial condition or affairs of BES Finance or the
Bank during the life of the Programme. Investors should review, inter alia, the documents
incorporated by reference into this Prospectus when deciding whether or not to purchase any
Notes.
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any
notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such
jurisdiction. The distribution of this Prospectus and the offer or sale of Notes may be restricted by
law in certain jurisdictions. BES Finance, the Bank, the Trustee and the Dealers do not represent
that this document may be lawfully distributed, or that any Notes may be lawfully offered, in
compliance with any applicable registration or other requirements in any such jurisdiction, or
pursuant to an exemption available thereunder, or assume any responsibility for facilitating any
such distribution or offering. In particular, no action has been taken by BES Finance, the Bank, the
Trustee or the Dealers which would permit a public offering of any Notes outside Luxembourg or
distribution of this document in any jurisdiction where action for that purpose is required.
Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Prospectus nor
any advertisement or other offering material may be distributed or published in any jurisdiction,
2

except under circumstances that will result in compliance with any applicable laws and regulations
and the Dealers have represented that all offers and sales by them will be made on the same terms.
Persons into whose possession this Prospectus or any Notes come must inform themselves about,
and observe, any such restrictions. In particular, there are restrictions on the distribution of this
Prospectus and the offer or sale of Notes in the United States, the European Economic Area
(including the United Kingdom, France, Germany and Portugal), Japan and the Cayman Islands (see
``Subscription and Sale'' below).
The Notes have not been and will not be registered under the United States Securities Act
1933, as amended (the ``Securities Act''), and are subject to U.S. tax law requirements. Subject to
certain exceptions, Notes may not be offered, sold or delivered within the United States or to
U.S. persons (see ``Subscription and Sale'' below).
All references in this document to ``U.S. dollars'', ``U.S.$'', ``$'' and ``U.S. cent' refer to
United States dollars and cents, those to ``Yen'' and ``JPY'' refer to Japanese yen, those to
``Sterling'', ``GBP' and ``£'' refer to pounds sterling, those to ``HKD'' refer to Hong Kong dollars,
those to ``Swiss Francs'' refer to Swiss francs, those to ``SEK'' refer to Swedish krona, those to
``PNL'' refer to Polish zloty and those to ``euro'' and ` E' refer to the currency introduced at the start
of the third stage of European economic and monetary union pursuant to the Treaty establishing
the European Community, as amended.
No invitation may be made to the public in the Cayman Islands to subscribe for the Notes.
TABLE OF CONTENTS
Page
Summary of the Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
General Description of the Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Documents Incorporated by Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Form of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Applicable Final Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
Terms and Conditions of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59
BES Finance Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
Banco Espi´rito Santo S.A. and BES Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109
Subscription and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as
the Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the
applicable Final Terms may over-allot Notes (provided that, in the case of any Tranche of Notes to
be admitted to trading on a regulated market in the European Economic Area, the aggregate
principal amount of Notes allotted does not exceed 105 per cent. of the aggregate principal amount
of the relevant Tranche) or effect transactions with a view to supporting the market price of the
Notes at a level higher than that which might otherwise prevail. However, there is no assurance that
the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake
stabilisation action. Any stabilisation action may begin on or after the date on which adequate
public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun,
may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of
the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of
Notes.
3

SUMMARY OF THE PROGRAMME
This summary must be read as an introduction to this Prospectus and any decision to invest in
any Notes should be based on a consideration of this Prospectus as a whole, including the
documents incorporated by reference. Following the implementation of the relevant provisions of
the Prospectus Directive in each Member State of the European Economic Area no civil liability will
attach to the Responsible Persons in any such Member State in respect of this Summary, including
any translation hereof, unless it is misleading, inaccurate or inconsistent when read together with
the other parts of this Prospectus. Where a claim relating to information contained in this
Prospectus is brought before a court in a Member State of the European Economic Area, the
plaintiff may, under the national legislation of the Member State where the claim is brought, be
required to bear the costs of translating the Prospectus before the legal proceedings are initiated.
Words and expressions defined in ` Form of the Notes' and ` Terms and Conditions of the Notes'
shall have the same meanings in this summary.
Issuers:
BES Finance Ltd., a Cayman Island incorporated finance subsidiary of Banco
Espi´rito Santo S.A.
Banco Espi´rito Santo S.A., a Portuguese incorporated bank.
In acting as an Issuer in relation to an issue of Notes, the Bank may specify that
for the purpose of such issue it is acting through its head office or its Madeira
Free Trade Zone branch or its Cayman Islands branch.
Guarantor:
Banco Espi´rito Santo S.A., a Portuguese incorporated bank.
@
In acting as a Guarantor in relation to an issue of Notes by BES Finance, the
Bank will be acting through its London branch.
Risk Factors:
There are certain factors that may affect the Issuer's ability to fulfil its
obligations under Notes issued under the Programme. These are set out under
` Risk Factors' below. There are also certain factors that may affect the
Guarantor's ability to fulfil its obligations under the Guarantee. These are also
set out under ``Risk Factors' below. In addition, there are certain factors which
are material for the purpose of assessing the market risks associated with Notes
issued under the Programme, see ` Risk Factors' .
Description:
Euro Medium Term Note Programme
Arranger:
Lehman Brothers International (Europe)
Dealers:
Banco Espi´rito Santo S.A.
Barclays Bank PLC
CALYON
Credit Suisse First Boston (Europe) Limited
Deutsche Bank AG, London Branch
Dresdner Bank Aktiengesellschaft
Goldman Sachs International
HSBC Bank plc
J.P. Morgan Securities Ltd.
Lehman Brothers International (Europe)
Merrill Lynch International
Mitsubishi UFJ Securities International plc
Socie´te´ Ge´ne´rale
UBS Limited
UniCredit Banca Mobiliare
and any other Dealers appointed in accordance with the Programme
Agreement.
Certain Restrictions:
Each issue of Notes denominated in a currency in respect of which particular
laws, guidelines, regulations, restrictions or reporting requirements apply will
only be issued in circumstances which comply with such laws, guidelines,
4

regulations, restrictions or reporting requirements from time to time (see
``Subscription and Sale'' on page 111).
Notes having a maturity
of less than one year:
Notes issued by BES Finance which have a maturity of less than one year will
constitute deposits for the purposes of the prohibition on accepting deposits
contained in section 19 of the Financial Services and Markets Act 2000 unless
they are issued to a limited class of professional investors and have a
denomination of at least £100,000 or its equivalent in other currencies.
Trustee:
J.P. Morgan Trustee and Depositary Company Limited
Issuing and Principal
Paying Agent:
JPMorgan Chase Bank, N.A.
Size:
Up to E10,000,000,000 (or its equivalent in other currencies calculated as
described herein on page 17) outstanding at any time. The Issuers may
increase the amount of the Programme in accordance with the terms of the
Programme Agreement (following the production of a supplementary
Prospectus by the Issuers) and any further or other documents required by
the relevant Stock Exchange for the purpose of listing any Notes to be issued
on the relevant Stock Exchange.
Distribution:
Notes may be distributed by way of private or public placement and in each
case on a syndicated or non-syndicated basis.
Currencies:
Subject to any applicable legal or regulatory restrictions, such currencies as
may be agreed between the relevant Issuer and the relevant Dealer.
Redenomination:
The applicable Final Terms may provide that certain Notes may be
redenominated in euro. The relevant provisions applicable to any such
redenomination are contained in Condition 21.
Maturities:
Such maturities as may be agreed between the relevant Issuer and the relevant
Dealer, subject to such minimum or maximum maturities as may be allowed or
required from time to time by the relevant central bank (or equivalent body) or
any laws or regulations applicable to the relevant Issuer and the Bank (where
the Issuer is BES Finance) or the relevant Specified Currency, provided that
Dated Subordinated Notes will have a minimum maturity of five years and
Undated Subordinated Notes will have no fixed maturity.
Issue Price:
Notes may be issued on a fully-paid or a partly-paid basis and at an issue price
which is at par or at a discount to, or premium over, par.
Form of Notes:
Each Tranche of Notes will initially be represented by a temporary global Note
which will be deposited on the relevant Issue Date with a common depositary
for Euroclear and Clearstream, Luxembourg and/or any other agreed clearing
system and which will be exchangeable, upon request, as described therein for
either a permanent global Note or definitive Notes (as indicated in the
applicable Final Terms and subject, in the case of definitive Notes, to such
notice period as is specified in the applicable Final Terms) in each case not
earlier than 40 days after the Issue Date upon certification of non-U.S.
beneficial ownership as required by U.S. Treasury regulations. A permanent
global Note will be exchangeable, unless otherwise specified in the applicable
Final Terms, upon request as described therein, in whole but not in part for
definitive Notes upon not less than 60 days' written notice to the Agent as
described in ``Form of the Notes'' below. Any interest in a global Note will be
transferable only in accordance with the rules and procedures for the time
being of Euroclear, Clearstream, Luxembourg and/or any other agreed
clearing system, as appropriate.
5

Fixed Rate Notes:
Fixed interest will be payable on such date or dates as may be agreed between
the relevant Issuer and the relevant Dealer and on redemption and will be
calculated on the basis of such Day Count Fraction as may be agreed between
the relevant Issuer and the relevant Dealer.
Floating Rate Notes:
Floating Rate Notes will bear interest at a rate determined:
(i)
on the same basis as the floating rate under a notional interest-rate swap
transaction in the relevant Specified Currency governed by an agreement
incorporating the 2000 ISDA Definitions (as published by the
International Swaps and Derivatives Association, Inc., and as amended
and updated as at the Issue Date of the first Tranche of the Notes of the
relevant Series); or
(ii)
on the basis of a reference rate appearing on the agreed screen page of a
commercial quotation service; or
(iii) on such other basis as may be agreed between the relevant Issuer and the
relevant Dealer,
in each case as indicated in the applicable Final Terms.
The Margin (if any) relating to such floating rate will be agreed between the
relevant Issuer and the relevant Dealer for each Series of Floating Rate Notes.
Index Linked Notes:
Payments of principal in respect of Index Linked Redemption Notes or of
interest in respect of Index Linked Interest Notes will be calculated by reference
to such index and/or formula or to changes in the prices of securities or
commodities or to such other factors as the relevant Issuer and the relevant
Dealer may agree (as indicated in the applicable Final Terms).
Other provisions in
relation to Floating
Rate Notes and
Index Linked
Interest Notes:
Floating Rate Notes and Index Linked Interest Notes may also have a
maximum interest rate, a minimum interest rate or both.
Interest on Floating Rate Notes and Index Linked Interest Notes in respect of
each Interest Period, as agreed prior to issue by the relevant Issuer and the
relevant Dealer, will be payable on such Interest Payment Dates, and will be
calculated on the basis of such Day Count Fraction, as may be agreed between
the relevant Issuer and the relevant Dealer.
Dual Currency Notes:
Payments (whether in respect of principal or interest and whether at maturity
or otherwise) in respect of Dual Currency Notes will be made in such
currencies, and based on such rates of exchange, as the relevant Issuer and the
relevant Dealer may agree (as indicated in the applicable Final Terms).
Zero Coupon Notes:
Zero Coupon Notes will be offered and sold at a discount to their nominal
amount and will not bear interest.
Redemption:
The Final Terms relating to each Tranche of Notes will indicate either that the
Notes of such Tranche cannot be redeemed prior to their stated maturity (other
than in specified instalments (see below), if applicable, or for taxation reasons
or following an Event of Default) or that such Notes will be redeemable at the
option of the relevant Issuer and/or the Noteholders upon giving not less than
30 nor more than 60 days' irrevocable notice (or such other notice period (if
any) as is indicated in the applicable Final Terms) to the Noteholders or the
relevant Issuer, as the case may be, on a date or dates specified prior to such
stated maturity and at a price or prices and on such terms as are indicated in
the applicable Final Terms.
6

Any early redemption of a Dated Subordinated Note or an Undated
Subordinated Note will be subject to the prior consent of the Bank of Portugal.
The Final Terms may provide that Notes may be redeemable in two or more
instalments of such amounts and on such dates as are indicated in the
applicable Final Terms.
Denomination of Notes: Notes will be issued in such denominations as may be agreed between the
relevant Issuer and the relevant Dealer and as indicated in the applicable Final
Terms save that the minimum denomination of each Note admitted to trading
on a European Economic Area exchange and/or offered to the public in a
Member State of the European Economic Area in circumstances which require
the publication of a prospectus under the Prospectus Directive will be E1,000
(or, if the Notes are denominated in a currency other than euro, the equivalent
amount in such currency) or such higher amount as may be allowed or required
from time to time by the relevant central bank (or equivalent body) or any laws
or regulations applicable to the relevant Specified Currency.
Taxation:
All payments in respect of the Notes will be made without deduction for or on
account of withholding taxes imposed within any Relevant Tax Jurisdiction (as
defined in Condition 7), subject as provided in Condition 8.
Negative Pledge:
The terms of the Senior Notes will contain a negative pledge provision as
further described in Condition 3. The terms of the Dated Subordinated Notes
and the Undated Subordinated Notes will contain no negative pledge.
Cross Default:
The terms of the Senior Notes will contain a cross default provision as further
described in Condition 10(A). The terms of the Dated Subordinated Notes and
the Undated Subordinated Notes will contain no cross default provision.
Status of the Notes:
The Senior Notes and the relative Receipts and Coupons will constitute direct,
unconditional, unsecured (subject to the provisions of Condition 3) and
unsubordinated obligations of the relevant Issuer and will rank pari passu with
all present and future unsecured and unsubordinated obligations of the relevant
Issuer, without any preference among themselves by reason of priority of date
of issue, currency of payment or otherwise, except for obligations given
priority by law.
The Dated Subordinated Notes and the relative Receipts and Coupons will
constitute direct, unsecured and subordinated obligations of the relevant Issuer
and will rank pari passu among themselves and at least pari passu with all
other present and future dated subordinated obligations of the relevant Issuer,
save for those that have been accorded by law preferential rights. Without
prejudice to the foregoing, the Dated Subordinated Notes will, in the event of a
distribution of the assets in the dissolution or liquidation of the relevant Issuer,
rank senior to the share capital of the relevant Issuer.
The Undated Subordinated Notes and the relative Receipts and Coupons (if
any) will constitute direct and unsecured obligations of the relevant Issuer,
subordinated as hereinafter referred to, and will rank pari passu without any
preference among themselves and at least pari passu with all other present
and future undated subordinated obligations of the relevant Issuer, save for
those that have been accorded by law preferential rights. Without prejudice to
the foregoing, the Undated Subordinated Notes will, in the event of a
distribution of the assets in the dissolution or liquidation of the relevant Issuer
rank senior to the share capital of the relevant Issuer.
In order to allow each of the Issuers or the Bank to continue its business
activities (in accordance with the Bank of Portugal Regulation 12/92 as
amended), any amounts which would be payable as principal or interest on
the Undated Subordinated Notes, will be available to meet the losses of the
7

Issuer or of the Bank provided: (a) that there has been (i) consumption of
the whole of the reserves and retained earnings; (ii) writing down of the
ordinary share capital of the Issuer and the Bank and (iii) writing down of
the Issuer's and the Bank's preference shares (including any preference
share capital guaranteed by the Bank); and (b) that therefore the Issuer's
and the Bank's total shareholders' equity and the preference shares
interests of the Issuer and the Bank have been reduced to zero.
In the above circumstances where unpaid principal and interest may be used to
meet the losses of the Issuer or of the Bank, the unpaid amounts of interest first
and then principal will be cancelled and utilised to the extent that may be
necessary to meet the losses of the Issuer or of the Bank. The cancelled
amounts will only be reinstated as subordinated credits of the corresponding
holders as if such amounts had never been written down or cancelled in the
event of (i) the winding-up, liquidation or bankruptcy of the Issuer or of the
Bank, in which event such reinstatement will be deemed to take effect at the
moment which immediately precedes the commencement of the winding-up,
liquidation or bankruptcy proceedings; or of (ii) a decision being taken by the
shareholders of the Issuer or of the Bank to allow a dividend to be paid or to
reinstate the cancelled or written down amounts, in each case subject to the
approval of the Bank of Portugal. In both the above cases and at all times,
cancelled or written down amounts will revert to being treated as subordinated
credits of the corresponding holders, without prejudice to the subordination
regime applying thereto.
During any period of cancellation or writing down such cancelled or written
down amounts shall not bear interest.
In the event of liquidation, bankruptcy or analogous proceedings of the Issuer,
no Noteholder (having a debt or a liability towards the Issuer) may exercise any
set-off or other similar rights against any amounts held by the Issuer.
Status of the Guarantee: The payment of the principal of, and interest on, the Notes issued by BES
A6.2
Finance will be unconditionally and irrevocably guaranteed (the ``Guarantee'')
by the Bank pursuant to the Trust Deed. The obligations of the Bank under
such guarantee will:
(1) in the case of Senior Notes, constitute direct, unconditional, unsecured
(subject to the provisions of Condition 3) and unsubordinated obligations
of the Bank and will rank pari passu with all present and future unsecured
(subject as aforesaid) and unsubordinated obligations (including those
arising under deposits received in its banking business) of the Bank, except
for obligations given priority by law;
(2) in the case of Dated Subordinated Notes, constitute direct, unsecured
obligations of the Bank but, in the event of dissolution or liquidation of the
Bank, subordinated in right of payment to the claims of depositors and
other unsecured creditors of the Bank (other than creditors in respect of
indebtedness which is subordinated to at least the same extent as the
obligations of the Bank under its guarantee in respect of the Dated
Subordinated Notes); and
(3) in the case of Undated Subordinated Notes, constitute direct, unsecured
obligations of the Bank which, to the extent permitted by Portuguese law,
are subordinated to the claims of Senior Creditors of the Bank, in that
payment under the Guarantee is conditional upon the Bank being solvent
at the time of payment and that no such payment shall be made except to
the extent that the Bank could make such payment and still be solvent
immediately thereafter. For this purpose, the Bank shall be considered to
be solvent if both (i) it is able to pay its debts to the Senior Creditors of the
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Bank as they fall due and (ii) its Assets exceed its Liabilities to Senior
Creditors of the Bank.
A report as to the solvency of the Bank by (a) two directors of the Bank or, if
the directors have not reported to BES Finance within 14 days before any
payment needs to be made pursuant to Condition 4(iii), the auditors of the
Bank or (b) if the Bank is being wound up, its liquidator shall, in each case in the
absence of manifest error, be treated and accepted by BES Finance, the Bank,
the Trustee and the holders of Undated Subordinated Notes issued by BES
Finance as correct and sufficient evidence thereof.
For the purposes of Condition 4(iii):
(A) ``Assets'' means the total consolidated gross assets of the Bank and
``Liabilities'' means the total consolidated gross liabilities of the Bank, all as
shown by the latest published audited consolidated balance sheet of the
Bank but adjusted for contingencies and for subsequent events in such
manner and to such extent as such directors, auditors or liquidator, as the
case may be, may determine to be appropriate; and
(B) ``Senior Creditors of the Bank'' means creditors of the Bank who (x) are
depositors or other unsubordinated creditors of the Bank or (y) are
subordinated creditors of the Bank other than those whose claims rank
pari passu with or junior to the claims of the holders of Undated
Subordinated Notes and persons entitled to claim under the Guarantee in
respect of such Notes.
The obligations of the Bank under the Guarantee in respect of Undated
Subordinated Notes are conditional upon the Bank being solvent immediately
before and after payment by the Bank. Any amount which might otherwise
have been allocated in or towards payment by BES Finance of principal and
interest in respect of the Undated Subordinated Notes will be available to meet
the losses of the Bank.
In the event of liquidation, bankruptcy or analogous proceedings of the Bank,
no Noteholder (having a debt or a liability towards the Bank) may exercise any
set-off or other similar rights against any amounts held by the Bank.
Listing and admission
to trading:
Application has been made to the CSSF to approve this document as a base
prospectus. Application has also been made to the Luxembourg Stock
Exchange for Notes issued under the Programme to be admitted to trading on
the Luxembourg Stock Exchange's regulated market and to be listed on the
Luxembourg Stock Exchange.
Notes may be listed or admitted to trading, as the case may be, on other or
further stock exchanges or markets agreed between the Issuer and the relevant
Dealer in relation to the Series. Notes which are neither listed nor admitted to
trading on any market may also be issued.
The applicable Final Terms will state whether or not the relevant Notes are to
be listed and/or admitted to trading and, if so, on which stock exchanges and/
or markets.
The Final Terms relating to each Tranche of Notes will state whether or not
and, if so, on which stock exchange(s) the Notes are to be listed.
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Governing Law:
The Notes will be governed by and construed in accordance with English law,
A5.4.2
except that Conditions 2(ii) and 2(iii) where the Bank acts in its capacity as
A12.4.1.3
issuer or guarantor, as the case may be and Conditions 4(ii) and 4(iii) will be
governed by and construed in accordance with Portuguese law.
Selling Restrictions:
There are restrictions on the offer, sale and transfer of the Notes in the United
States, the European Economic Area (including the United Kingdom, France,
Germany and Portugal), Japan and the Cayman Islands. See ``Subscription and
Sale'' below.
10