According to Deloitte’s audit report, which Lusa was able to access, Novo Banco created, in 2020, a new division, called the Asset Valuation Area, which became responsible “for analyzing the fair value of assets that are recorded at fair value in the financial statements.” The Bank, in addition to performing critical analyzes of external evaluations received from third parties on these assets.”
That year, that area began a fair value reassessment of the bank’s illiquid asset portfolio, which includes 23 properties that, as of December 31, 2019, had a net worth of €225.4 million.
“For the above 23 properties, the revaluation promoted by the Asset Valuation District was found to have resulted in a total deviation of approximately €61 million (…) indicated for these properties with a total valuation value of €218 million,” the document reads. which the government sent to Parliament in April.
The report also shows that for these 23 properties, Novo Banco has already realized total losses of about 58 million euros in 2019 and about 81 million in previous years.
He stated that “these losses represent a total devaluation of the currency until the end of 2019, before the revaluation process that was promoted in 2020, by about 38%.”
The document also states that, according to the documents provided by Novo Banco, the valuations that resulted from the process conducted by the Asset Valuation District “were lower than the valuation values obtained in 2020 during the repeated process of real estate appraisal,” which is mainly due to the fact Some of the assumptions inherent in the evaluations have been revised.
The subject of contention is the revision of the discount rate and key performance indicators (KPIs) for several real estate projects, as the Bank considers that the previously assumed values do not reflect the real investment risks of each project or the change in the property type from buildable land to rural land because, according to internal regulations For the bank, the conditions for the development of the expected real estate projects were not met.
In addition, “for many real estate projects, higher construction costs have been estimated, in order to more accurately reflect prevailing market values.”
This third private audit was conducted by Deloitte as determined by the Government, following a June 2021 repayment by the Settlement Fund, based on fiscal year 2020, in accordance with the terms of the Contingent Capitalization Agreement (“CCA”).
In 2021, the amount paid by the Resolution Fund for the 2020 accounts amounted to €429 million.
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