Deloitte@ (Adds reaction from bond holders)
FRANKFURT, Feb 2 (Reuters) - Spain's Banco Popular could have been worth more than a billion euros when it was sold to larger rival Santander for just one euro in June, the independent valuation used by authorities to inform the sale showed on Friday.
Saddled with bad debt and facing a run on its deposits, Popular became the first bank to be wound down using new European rules aimed at avoiding bailouts by taxpayers.
But its sale for a nominal one euro, orchestrated by the European Union's Single Resolution Board (SRB), was contested by investors who lost 850 million euros ($1.1 billion) as a result and demand compensation.
In a confidential report sent to the SRB at the time and published on Friday, consultancy firm Deloitte valued Popular's equity at 1.3 billion euros in its most optimistic scenario, or "best case".
The publication of Deloitte's report, in which Popular is referred to using the code-name Hippocrates, marks a victory for investors who had been asking for more information about the SRB's decision.
In its "worst case" and base estimates, which were made public by authorities after the sale, Deloitte put Popular's value several billion euros less than zero.
Deloitte's report cautioned its estimates were "highly uncertain" because they were put together in just 12 days and with patchy information, adding the real value of the bank was best determined through an open and competitive sale process.
"The best offer received following such a sale process is likely to be the best and most reliable indication of the value of the bank," the firm's consultants, whose name was redacted, said in the report dated June 6, a day before Popular's sale.
Some key information, such as Deloitte's estimate of how much money creditors could have recouped if the bank had been put into insolvency rather than sold, was blanked out in the document published by the SRB on Friday.
Law firm Quinn Emanuel, which represents a group of bond holders whose assets were wiped out in the process, criticised the speed the report was put together and the limited access the SRB had to critical information.
"It is now obvious why the SRB didn't want to disclose this report as it clearly shows the absence of any real analysis and proper valuation," lead partner Richard East said in a statement.
European Union rules state that creditors should not be left worse off after a bank is wound down using new "bail-in" arrangements than they would be if the firm had simply gone into insolvency.
The consultants highlighted some missing data and incorrect property valuations.
"Most of the inconsistencies identified are due to the inadequate consideration of the ECO rules," Deloitte said, referring to Spanish regulations on the valuation of real estate assets.
The Spanish High Court is investigating the role of former Popular chairmen Angel Ron and Emilio Saracho in Popular's collapse following complaints by shareholders. The former directors have denied any wrongdoing.
The court is looking at allegations of false financial statements, investor fraud, market manipulation, and possible insider trading at Popular, according to Quinn Emanuel.
Launched in 2014 to end an era of bank bailouts, the SRB came under fire last year for deciding not to intervene in two failing Italian banks, weeks after forcing losses on Popular investors.
($1 = 0.8011 euros) (Reporting by Francesco Canepa; Editing by Andrew Roche and Mark Potter)