Is there something in the water down in Puerto Rico?
Late on Friday, First Bancorp
Accounting scandals have now nailed three of the island's largest financial institutions -- Doral Financial
Any way you slice it, this hasn't been a good year for Puerto Rican banks. Doral is in the dock for questionable accounting on interest-only strips and will likely wipe out more than $600 million in shareholder equity. R&G, meanwhile, is restating its results. The Securities and Exchange Commission is also taking a look at what happened with respect to all three companies' accounting and reporting.
In response, shares of Doral have fallen by more than two-thirds over the past year, with R&G having dropped by a like amount. First Bancorp has dipped less than the others, but a drop over the past 12 months of more than 30% hardly deserves a best-in-class designation. Worse, in what may be a case of companies getting tarred by the same brush, W Holdings
Of course, it doesn't necessarily take an industrywide scandal to turn off investors. Contrary to what many think, the Puerto Rican market isn't so great. In fact, from a deposit perspective, it's a pretty difficult market with some pretty high costs. And while that's never really great news, it's even worse when the yield curve flattens out the way it has over the past year or so.
Investors who think they just have to be involved in Puerto Rican banks might want to check out Banco Popular
For more Takes to bank on:
- Yield Curve Claims Fifth Third
- Commerce Still Yields to the Rules
- A Closer Look at Bank Stocks
- Doral Management Gets the Heave-Ho
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).