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In 2021, the FROB cuts its losses to 1,352 millions

The Fund for Orderly Bank Restructuring has seen its losses drop to 1,352 millions euros in 2021, compared with the'red numbers of 3,639million euros in 2020.

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In 2021, the FROB cuts its losses to 1,352 millions

The Fund for Orderly Bank Restructuring has seen its losses drop to 1,352 millions euros in 2021, compared with the'red numbers of 3,639million euros in 2020. This result is explained by an accounting adjustment that was made in the valuation of FROB's participation at BFA. It also does not have any impact on the deficit and public debt as reported by the agency.

The FROB used accounting regulations to determine the book value of BFA's stake in BFA for the 2021 financial years. It used the BFA Group's individual net worth as a reference and not the percentage of BFA Group's net worth as it did last fiscal year.

Consequently, BFA's net worth in 2021 was 4,492 million euros, compared with 4,029 million in 2020. This is due to the revaluation first in Bankia, then in CaixaBank. However, the result for FROB has had a negative effect on the income statement of 1,483 millions euros (when calculating impairment in relation to the 5,975million euros at which BFA's stake was valued in 2020).

The FROB explained that it was a "merely accounting effect, with which all adjustments resulting in the merger are taken into consideration. This is not a reflection on the positive evolution, since the announcement, of BFA's stake in Bankia and CaixaBank. This participation was revalued at 122% by the FROB up to the date of formulating accounts.

Concerning its stake in Sareb: The FROB has already recorded the full write-down in 2019, so it has not had an impact on the 2021 accounts.

The FROB also saw a positive effect of 168 millions in its income statement due to the increased provision resulting in the updating of the estimate cost of the guarantees granted in the sale of entities.

The fund also recorded a positive income in the same year of 22 million euros due to ongoing legal proceedings.

The FROB balance sheets are worth 5,183 million euro at the end 2021. This is a difference from the 1,390 million negative net worth a year ago.

The FROB's treasury amounted at 687 million Euros. These funds are invested in State Public Debt assets as well as in a current account at Bank of Spain.

The financial margin was negative at -69 million, as the assets on FROB's balance sheet (mainly BFA's stake and FROB cash position) didn't generate enough income to offset the financial costs of the FROBs liabilities. These liabilities are financed primarily through loans received from the State. After partial capitalization and prior authorization from ESM (European Stability Mechanism), the loan balance was 1,865 million Euros at the end of 2021. This transaction took place on December 20, 2021.

The National Resolution Fund (FRN), which was established to collect contributions from subject entities to the FRN, recorded a positive result at 4.12 million euros, compared with 970,000 euros a previous year. These are service companies that invest in certain services and not included in the European Central Bank's (ECB) banking groups. There are also branches in Spain of investment companies and credit institutions.

The fund's net assets were 9.88 million euro, which included contributions from these entities between 2015-2021 (both inclusive).

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