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Washington (AFP) — Goldman Sachs stands to lose money on a multi-million euro loan it made to one of Portugal’s largest banks a month before it collapsed, the Wall Street Journal reported on Tuesday.

The U.S. investment bank made the $835-million loan in July through a Luxembourg financing vehicle it created at a time when Banco Espirito Santo, on the verge of bankruptcy, found it nearly impossible to borrow money directly in capital markets, the newspaper said.

The loan proved to be only a brief lifeline for BES, which was bailed out and dismantled in August. A recapitalization of nearly 5 billion euros was paid for largely with public money.

The Journal said Goldman Sachs would lose money on the previously undisclosed deal.

Quoting a source familiar with the matter, it said the U.S. bank had planned to sell the debt to outside investors but struggled to find buyers.

Goldman Sachs managed to sell part of the debt at a loss to hedge funds specialising in distressed debt but still holds part of the liability, which has lost value, the newspaper said. It did not specify how much the bank stands to lose.

The so-called special purpose vehicle (SPV) used to make the loan is being probed by Portuguese regulators looking at BES’s collapse.

Last month Credit Suisse acknowledged it created SPVs that allegedly allowed the Portuguese bank to keep issuing debt despite its financial woes.

AFP Photo/Mario Tama

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Gov. Doug Ducey with Senate President Karen Fann and former President Donald Trump

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