The Fund clarifies that the value it gives to its banking investments has increased by 122% following the merger of Bankia with CaixaBank
The Fund for Orderly Bank Restructuring (FROB) reduced its losses to 1,352 million euros in 2021, compared to the ‘red numbers’ of 3,639 million euros in 2020, a result explained by the accounting adjustment included in the valuation of the FROB participation in BFA and that it has no impact on the deficit or government debt, as reported by the agency.
In accordance with the provisions of the accounting regulations and taking into account that BFA is no longer the head of an economic group following the merger between CaixaBank and Bankia, FROB has made an estimate of the book value of its interest in BFA in the financial year 2021, taking into account as reference the individual assets of BFA shown in the financial statements as at 31 December 2021, instead of its percentage in the assets of the BFA Group, as last year.
Although BFA’s individual assets amounted to 4,492 million euros in 2021, compared to 4,029 million euros in 2020, as a result of the revaluation of its participation, first in Bankia and later in CaixaBank, the FROB result had a negative impact on the income statement of 1,483 million euros (when calculating the impairment related to the 5,975 million euros against which FROB’s stake in BFA was valued in 2020).
The FROB explained that, like last year, it is a “only accounting impact, taking into account all the adjustments arising from the merger, which does not reflect the positive evolution since the announcement of the operation , of the market value of the stake of BFA, first in Bankia and then in CaixaBank”. Up to the date of preparation of the accounts, this participation was revalued at EUR 2,404 million, or 122%.
As for its stake in Sareb, the FROB has already recorded the full write-off in 2019, so there is no impact on the 2021 accounts for this concept.
The FROB also recorded a positive impact of 168 million in the income statement due to the excess of the provision resulting from the update of the estimate of the cost of the guarantees granted by the FROB in the sales processes of entities.
Similarly, the fund posted positive income of EUR 22 million in the year as a result of pending legal proceedings.
The FROB balance sheet stands at 5,183 million euros at the end of 2021, with positive net assets of 2,849 million euros, compared to negative net assets of 1,390 million a year earlier.
The amount of the FROB’s treasury amounted to 687 million euros, which is invested in government debt and in a current account with the Bank of Spain.
The financial margin was negative (-69 million), as the assets on the FROB’s balance sheet (mainly the interest in BFA and the FROB’s cash position) did not generate sufficient income to cover the financial costs of the FROB’s liabilities, which were mainly financed be compensated. through the state loan. At the end of 2021, this loan had a balance of 1,865 million euros, after partial capitalisation, pre-approval of the European Stability Mechanism (ESM), executed on 20 December 2021.
The National Resolution Fund (FRN) posted a positive result of 4.12 million euros, compared to 970,000 euros a year earlier, on the collection of contributions to the FRN made by the entities involved, i.e. investments by certain service companies that are not are included in banking groups supervised by the European Central Bank (ECB) and branches in Spain of credit institutions and investment services established outside the European Union.
The fund’s net assets amounted to 9.88 million euros, consisting of the contributions from these entities between 2015 and 2021 (both included).
Source: La Verdad