BPI posts a loss after selling 2% of Banco de Fomento Angola

14 November 2016

The reduction from 50.1% to 48.1% of Portuguese bank Banco BPI’s stake in Banco de Fomento Angola would have led the bank from a profit of 183 million euros to a loss of 25 million euros if it had occurred in the third quarter, according to a document released to the market.

A presentation published by the Portuguese Securities Market Commission (CMVM), in which the bank demonstrates the implications of that sale on its consolidated financial statements and capital ratios, shows that the bank will no longer record its stake in Angola by the full consolidation method and begin using the equity method.

This means that to date BPI recognised in its accounts the entire result of the BFA (as it had a controlling position) and when it gets to below 50% it will only reflect BFA’s results in proportion to its actual shareholding.

In addition to a negative impact of over 200 million euros in terms of net result, BPI estimates that if the sale of 2% of BFA had already occurred in the accounts for the first nine months of the year it would post banking income 171 million euros lower than was actually reported to the market.

The sale of 2% of BFA to Unitel telecommunications company aims to respond to the European Central Bank’s concerns, to reduce the exposure of BPI to the Angolan market and thus improve the capital ratios of the Portuguese bank.

The presentation sent to the CMVM indicates that BPI’s capital ratio would have improved by 0.2 percentage points if the sale of 2% had been implemented by 30 September, which means that the ratios “will only benefit from the contribution of BFA at the time of distribution of BFA dividends to Banco BPI.”

This sale still needs approval by the general meeting of the BPI, which is scheduled for 23 November. (macauhub)