The People’s Bank has revised the forecasts included in the report and the first quarter of this year accounts, updating the risks it faces in its operation. A measure required by the auditors, at a time when the Spanish bank announced a capital increase of EUR 2.5 billion which caused an abrupt and historic fall of its value on the stock exchange.
In the document, the bank led by Ángel Ron estimates that can close 2016 with a net loss of nearly 2,000 million, as a result of provisions that can reach 4,700 million euros due to a variety of risk factors .
Among the risks updated by the bank, following the requirements of auditors, are the scene of political and economic uncertainty in Spain, the worsening of the global macro-economic outlook, instability of financial markets or the impact low interest rates in the profitability of the sector. And still uncertainty over disputes relating to the minimum interest rates whose legality the European Court of Justice is evaluating. If the decision is of nullity of clauses (which slow the decline in reference interest in the benefits of real estate loans), the People’s Bank may have to absorb losses for which now provisioned 684 million euros, against 350 million previously provided.
In the same report and updated accounts, the People’s Bank states that the estimated loss of 2,000 million will be covered “fully” to sound effects, the increase of capital of EUR 2,500 million announced Thursday , may, 27. And “the temporary suspension of distribution as dividend to face the above context of uncertainty with the greatest possible strength.”
The People’s Bank suffered on Thursday the biggest drop in the stock exchange of its history (-26%) after announcing the capital increase of 2,500 million euros with a discount of 45% after have capital needs have been identified to cover balance sheet weaknesses related to the existence of troubled assets, mainly in the real estate sector.
The Spanish bank has a significant presence in Portugal, counting at the end of 2015 with 169 branches and 1,162 employees in the Portuguese market. And he was recently in the race for Banif, eventually give up.
Popular Bank’s shares to fall below 4.91% to 1.65 euros.
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