The Resolution Fund - 2016 accounts

The Resolution Fund is the Portuguese national entity created to finance the application of resolution measures by the Bank of Portugal. Although resolution measures should be financed by contribution from banks and financial institutions that are members of the Resolution Fund, in the case of the BES resolution in 2014 the initial capital injection of €4.9 billion by the Resolution Fund in Novo Banco was financed in €3.9 billion by the Portuguese State and only the remainder by the banks that are members of the Resolution Fund. On January 2018, the Resolution Fund disclosed its Annual Report for 2016, in which it recognizes full loss of the €4.9 billion cash injunction made into Novo Banco at the time the resolution measure was taken back in 2014:

“As described in Chapter 3, at the end of the financial year 2016, the own resources of the Resolution Fund had a negative balance of €4.76 billion, representing a reduction of €4.65 billion from the level of own resources observed in the previous year. This variation is essentially justified by the recognition, on the basis of criteria of prudence, of an impairment corresponding to 100% of the holding held by the Resolution Fund in the capital stock of Novo Banco, S.A. (-€4.9 billion)”.

The Annual Report for 2016 is available at (http://www.fundoderesolucao.pt/pt-PT/RelatorioseContas/Documents/Rel2016.pdf) (in Portuguese).