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The Hole in BPN’s Heirs Accounts Already Exceeds €4.9 Billion

 

11 August 2017

Parvalorem, Parups and Parparticipadas recorded negative equity of €4.9 billion at the end of the year, around 250 million euros worse than at the end of the year before.

The heirs of Banco Português de Negócios (BPN) are on their way to a 5-billion-euro hole. Parvalorem, Parups and Parparticipadas’ equity amounted, at the end of last year, to negative 4.9 billion euros.

The equity of the vehicles that received assets from BPN, a bank which was nationalized by the Portuguese state, worsened by more than 250 million euros in 2016, thanks to negative results at each of the three companies.

Even if all the assets of the three companies were successfully divested or liquidated, there would still be unpaid liabilities of €4.9 billion, according to calculations by the Jornal de Negócios, based on the company’s reports and accounts, published this week.

Parvalorem, which was left with BPN’s toxic debts, accounts for the largest part of the negative performance since it has a capital of 3.85 billion euros. Parups, the company that managed the bank’s real estate investment fund units, comes next with liabilities exceeding assets by 932 million euros. Parparticipadas, which holds shares in companies and banks, has the least unbalanced equity position: a negative equity of €144 million.

In all, the three partner companies – which absorbed the assets and liabilities that BIC refused to take on in 2012 when it bought BPN – had equity of 4,928 million euros last year. The financial situation of these companies was never expected to be good, considering that they were created specifically to take on the worst performing assets of the bank founded by José Oliveira Costa.

The €4.9-billion in negative equity of these vehicles should represent future costs to the Portuguese state, excluding loans that have already been recognized (2.2 billion euros in 2015). The charges may, however, be different, since the assets may be liquidated at values other than those that are recognized in official accounts.

Even without including the companies’ shareholders equity, losses have already been recorded: the Court of Auditors recorded losses of 3.66 billion euros for the state with the nationalization and reprivatisation of BPN up to 2016.

Original Story: Jornal de Negócios – Diogo Cavaleiro

Photo Credit: Bruno Simão

Translation: Richard Turner