If the Fund had chosen to register one impairment for what it lost with Novo Banco, the Portuguese deficit would have worsened by 2.5 percentage points.
The Resolution Fund acknowledged in their own balance how much it lost with the devaluation of Novo Banco. Therefore, those losses will not weigh in on public accounts, even though the Fund is a public entity, discloses Portuguese newspaper Jornal de Negócios this Thursday.
The Resolution Fund made a 4.9 billion euros‘ injection in Novo Banco when it was first created in 2014, becoming the only shreholder of the bank which derived from the resolution of Banco Espírito Santo (BES). Now, by means of the agreement reached with the North-American fund Lone Star, the Resolution Fund will hold a 25% equity on Novo Banco, worth 333.3 million euros — if there had been no devaluation, the 25% equity would be worth 1,225 million euros.
According to Jornal de Negócios, if the Fund had chosen to register an impairment for this loss, it would suffer losses surpassing 4,600 million euros. Public accounts, on the other hand, would be equally penalized, which would result in a 2.5 percentage points worsening of the deficit.
However, the Resolution Fund has acknowledged Novo Banco‘s devaluation in their own capital, by constituting a negative reserve, the same newspaper writes. All in all, the fund ended up with negative equity surpassing four billion euros last year; in 2015, the Fund’s own assets had a negative worth of 11 million.