Doral Falls as SEC Opens Probe Into Puerto Rico Tax Receivables

Aug 15, 2014 8:57 am ET

Aug. 15 (Bloomberg) -- Doral Financial Corp., the Puerto Rico bank that hasn’t posted an annual profit for almost a decade, fell as much as 4.7 percent after disclosing it received a subpoena from the Securities and Exchange Commission.

Regulators are examining Puerto Rico tax receivables, the bank’s compliance with a consent order, and allowances for loan and lease losses, the San Juan-based lender said today in a regulatory filing. The company said it’s cooperating with the SEC’s investigation.

Doral is deciding whether to take an impairment charge related to a $229.9 million tax refund it’s demanding from Puerto Rico’s government, the bank said in June. It asked Puerto Rico’s Department of Treasury in May to honor a 2012 accord for the tax refund, and the agency responded that the agreement was “null and that Doral has no right to a refund,” Doral said in a previous filing.

Shares of the company fell 29 cents to $6.95 at 8:26 a.m. in New York and earlier dropped as low as $6.90. They plunged 54 percent this year through yesterday.

The bank is trying to sell pieces of its business to raise capital, people with knowledge of the matter said last month. It’s in the early stages of shopping the commercial real estate division, valued at more than $600 million, and is auctioning branches and loans in New York and Florida that could fetch more than $100 million combined, said the people, who asked not to be identified because the information is private.

Doral posted an $88.3 million loss last year because of mounting levels of unpaid business and home loans.

--With assistance from Matthew Monks in New York.