Popular takes $55M hit after losing appeal in FDIC fight
Banco Popular de Puerto Rico announced Tuesday that it lost an appeal before a review board deciding over a dispute with the Federal Deposit Insurance Corp., representing a $55 million hit for the bank.
The bank had asked the FDIC for that amount in reimbursement under the commercial loss share agreement entered into in connection with the Westernbank FDIC-assisted transaction in 2010.
The $55 million are part of $248.7 million in loans that Popular asked to be reviewed for a possible reimbursement through the arbitration process.
“While we are very disappointed with this result, we will continue to actively assert our rights under the commercial loss share agreement for the benefit of our shareholders,” said Popular Inc. CEO Richard Carrión on Tuesday.
As a result of the decision, for the quarter ended Sept. 30, 2016, Popular expects to recognize a pre-tax charge of approximately $55 million and a corresponding reduction to its FDIC indemnification asset.