Spain's Banco Popular has posted a larger-than-expected 3.5 billion euros loss due to extraordinary provisions and one-off charges to clean its balance sheet of toxic real estate assets. Ciara Lee reports.
Already considered the weak link of Spain's banking sector, Banco Popular's 2016 results did little to shed that image. It posted a 3.5 billion euro loss, thanks to extraordinary provisions and one-off charges to clean its balance sheet of toxic real estate assets. The lender had predicted its clean-up exercise could lead to losses of 2 billion euros and analysts had predicted a 2.4 billion euro loss. (SOUNDBITE) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR, SAYING: "It had rather been telegraphed in advance and so one can tell from looking at the benchmark Spanish index that investors have rather taken it in their stride for now, although it does hint of course at an underlying vulnerability." Spain's economic recovery has been gathering steam. But with losses also reported this week from bailed-out Bankia, the sector's efforts to clean-up bad loans is getting fresh attention. (SOUNDBITE) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR, SAYING: "One has a niggling suspicion that it may only be a matter of time before Spain comes back into the spotlight. And results such as this from as vulnerable a bank as Banco Popular must of course raise questions over not just the health of the Spanish banking sector, but the health of the peripheral banking sector in general of course." Shareholders in Banco Popular will likely be hoping for better times ahead under a new chairman. They rebelled in November over a failure to clean the bank's books.