The main real estate companies of Grupo Popular experienced losses for 1564 million Euros last year.
The red numbers of Aliseda, the most important subsidiary of Banco Popular before integrating Pastor, reached 975 million Euros. These losses surpass 3,7 times those experienced by the institution in 2011 (260 million Euros).
As a consequence of this result, Aliseda presented a negative equity of 1216 million Euros at the end of December 2012, opposite to the 30 million Euros he had on the previous year. According to the annual accounts of Popular in 2012, the assets of Aliseda were 2873 million Euros at the end of 2012, while their value in books reached 357 million Euros.
The losses of the real estate company of the former Banco Pastor, Inversiones Inmobiliarias Canvives, reached 589 million Euros last year, with a negative equity of 671 million Euros.
Both companies are controlled fully by Popular and do not have any shareholding relationship between them. The results of both institutions are, according to the bank, a consequence of the great effort in provisions made last year. Popular carried out a restructuring plan in 2012 which included a capital extension of 2500 million Euros. The institution provisioned 9600 million Euros, causing consolidated losses of 2461 million Euros in 2012, opposite to the profit of 480 million Euros in 2011.
Sources within the bank stress that Popular is now the Spanish financial institution with more coverage in its exposure to the real estate sector. With this restructuring effort, Popular has increased the ratio of global coverage of defaulting debtors up to 65%; while the ratio of coverage of unsuccessful debtors reaches 74%. The bank plans to earn 500 million Euros in 2013.
Popular obtained last year a gain of 122 million Euros with the sale of properties.
The group has started the concentration of its real estate subsidiaries. Aliseda has absorbed nine minor institutions which originated from Pastor and whose contents were awarded assets. Canvives has integrated another company as well.