Spain's Struggling Banco Popular to Replace Chairman
December 01 2016 - 8:30AM
Dow Jones News
MADRID—Banco Popular Españ ol SA's board said on Thursday it
plans to replace longtime Chairman Á ngel Ron, a step forward for
Spain's most troubled major bank, which has been unable to clean up
a balance sheet mired in profit-sapping foreclosures and bad loans
taken on during the country's 2008 property boom-gone-bust.
Banco Popular had become a black spot on Spain's thorough
cleanup of its banking system since the downturn. Other major
Spanish lenders that helped to fuel the country's lending and
building binge have been quicker to sell soured property assets at
a loss and move on. Banco Popular, on the other hand, is still
struggling with around €32 billion ($32.9 billion) in bad loans and
other nonperforming assets. The bank's market value is around €3.8
billion.
Mr. Ron became executive chairman in October 2004 and Banco
Popular's shares have fallen around 96% since then. He has been
reluctant to have the lender swallowed by a competitor, bankers and
investors say. His exit paves the way for the bank's potential
acquisition, which would likely accelerate the sale of the its
nonperforming assets by the acquiring bank—easing a risk to Spain's
banking system.
Shares were up around 9% at 12.30 GMT on news of Mr. Ron's exit
and on reports by local media that larger Spanish banks had
expressed interest in acquiring the lender. Banco Popular said in a
regulatory filing that board members expected J.P. Morgan Chase
& Co. executive Emilio Saracho Rodrí guez de Torres to replace
Mr. Ron as executive chairman in the first quarter of next
year.
Still, a takeover isn't a given—the bank could continue to
muddle along independently.
Banco Popular's balance sheet could give some potential suitors
pause because there are doubts about how much more in loan-loss
provisions the bank needs. At least one potential buyer, Spain's
Banco de Sabadell SA, has walked away.
Pressure has been building on Mr. Ron after the bank raised €2.5
billion through a rights issue in May in a bid to quiet investor
concerns that it didn't have enough funds to effectively provision
for its bad loans. Unconvinced that the fresh capital was enough to
plug Banco Popular's provisions shortfall, and following
weaker-than-expected third-quarter results, shares continued to
fall.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
December 01, 2016 08:15 ET (13:15 GMT)
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