Report on Banco Popular highlights ‘uncertain’ valuation

The EU’s agency for winding down failing banks on Friday made public a controversial report by consultants Deloitte used as a base to rescue Spain’s Banco Popular that left experts scratching their heads.

The move came after Spanish lawmakers — who denounced the murkiness of the sale of the embattled bank to its larger rival Banco Santander for a symbolic euro in June 2017 — demanded to see the document for themselves.

Deloitte estimated the value of Popular between plus 1.3 billion euros and minus 8.2 billion euros (+$1.6 billion and -$10.2 billion), a huge discrepancy that puzzled banking experts.

In the report, large swathes of which were blackened out for confidentiality reasons, Deloitte also said it had “been required to draft this report in an extremely short period of time” — 12 days for a project that would normally take “at least six weeks.”

It added it had very limited access to managers, auditors and supervisors of the bank. “This valuation should therefore be regarded as highly uncertain,” it said in the report published Friday by the EU’s Single Resolution Board.

This agency, operational since January 2016, intervenes once the European Central Bank decides a bank is no longer viable.

It intervened for the first time overnight on June 6 last year, deciding that Santander would buy Banco Popular for one euro as Spain’s sixth largest bank was “failing or likely to fail.”

Spain’s Economy Minister Luis de Guindos subsequently explained that by then, Popular no longer had any liquidity and would not have been able to open its agencies the next day if it hadn’t been bought.

In the weeks prior, many had taken their money out of the bank as concern rose over the state of its accounts, adding to the liquidity crisis.

Some 300,000 shareholders in the bank lost all their investments during the rescue.

Some are suing in Spain and 98 complaints have been made to the EU court of justice based in Luxembourg.

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