According to an audit report conducted by Deloitte, to which Lusa had access, Novo Banco created a new department in 2020, dubbed the “Asset Valuation Area”, which became responsible “for analyzing the fair value of assets that are carried at fair value in the Bank’s financial statements. , as well as conducting a critical analysis of external assessments received from third parties in relation to these assets.
In the same year, fair value revaluation of the bank’s illiquid asset portfolio began in the area, which includes 23 properties with a net worth of €225.4 million as at 31 December 2019.
“For the 23 properties mentioned above, it was found that the revaluation carried out by the Asset Valuation Zone resulted in a total deviation of around 61 million euros (…), indicating a total estimated value of these properties of 218 million euros,” reads the statement. message. a document that the government submitted to parliament in April.
The report also clarifies that for these 23 properties, Novo Banco has already recognized total losses of around 58 million euros in 2019 and around 81 million in previous years.
“These losses represented a general devaluation through the end of 2019, prior to the revaluation in 2020, by approximately 38%,” the report said.
The document also states that, according to documentation provided by Novo Banco, the valuations obtained from the process conducted by the Asset Valuation Zone “were lower than the valuations obtained in 2020 during the periodic real estate valuation process.” which was mainly due to the fact that some of the assumptions inherent in the estimates were revised.
We are talking about revising the discount rate and KPIs (“Key Performance Indicators”) of several real estate projects, as the bank believes that the previously accepted values did not reflect the real investment risk of each project or the change in ownership type from urbanized land to rural land, because, according to the bank’s internal rules, the conditions for the development of the envisaged real estate projects are not met.
In addition, “higher construction costs have been estimated for several real estate projects to more accurately reflect the prevailing market value.”
This third special audit was conducted by Deloitte pursuant to a government decision following a June 2021 settlement by the Settlement Fund, based on fiscal year 2020, in accordance with the terms of the Conditional Capitalization Agreement (“CCA”).
In 2021, the Resolution Fund’s payment for the 2020 accounts amounted to 429 million euros.
