Super Fund files against central bank

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The New Zealand Superannuation Fund has filed legal proceedings in Portugal against that country's central bank as it tries to claw back a loan to a failed Portuguese lender that resulted in a $200 million write-off.

The loan - part of a US$784 million credit package US investment bank Goldman Sachs put together through its Oak Finance vehicle - was made one month before Banco Espirito Santo (BES) collapsed last year.

The Bank of Portugal then split the country's biggest lender in two, with one part holding the good assets and the toxic assets placed in the other.

The Oak Finance loan became stranded in the so-called "bad bank" - effectively wiping out the investment - following a retrospective law change by the Bank of Portugal that deemed Oak Finance a related party.

The move by the Portuguese central bank also voided insurance, in the form of a credit default swap, the Super Fund had taken on the loan.

In February the Super Fund announced it had written off the loan and was suing Portugal's central bank over the law change, which chief executive Adrian Orr called a "wild-card, Black Swan event".

The fund filed the Portuguese proceedings yesterday morning.

"These proceedings are in addition to the English debt recovery action launched in February against Novo Banco [the good bank]," it said.

Court documents filed in England show the Super Fund is lining up alongside Karrick, an investment vehicle for Indian steel billionaire Lakshmi Mittal, and vulture funds that also invested in the Oak Finance loan.