Banco Popular fell due to the massive flight of deposits suffered during the second quarter of 2017. That is the conclusion reached by the experts appointed by the Bank of Spain to investigate the causes of the resolution of the entity. In particular, Banco Popular suffered three episodes of deposit flight between April and June of that year, being the one that originates on May 31 of special gravity.
Inspectors Santiago Jesús Ruiz-Clavijo and Pablo Hernández Romeo have analyzed the documentation on Popular in the framework of the investigation of their sales process. Their conclusions, which have been sent by the Bank of Spain to the Court of Instruction number 4 of the National Court, also reveal that the entity it would have required a strong "injection of public money" if a "prestige" entity did not give it the necessary capital. "Given the impact that the liquidation of the Banco Popular would have for the economy as a whole, it is for this reason that the authorities opted for its resolution instead of its liquidation," the experts say.
The mission of the experts was to investigate whether the prospectus and the documentation corresponding to the capital increase launched by the entity in May 2016 offered a true image of the bank and were free of any type of manipulation or deformation, and if the hypothesis for the Estimation of possible losses amounting to 2,000 million euros that were included in the prospectus of the capital increase were reasonable.
In this sense, the inspectors have concluded that some of the hypotheses to reach the estimates contained in the brochure of the extension were "too optimistic", especially the expected evolution of doubtful loans. This, together with the "low" coverage planned for foreclosures, "invalidated the coverage, loss and solvency estimates of this document". Regarding the reliability of the accounts for the years 2015 and 2016 published by Popular, the report states that the data contained in "did not respect aspects of accounting regulations".