Spain's Banco Popular to Launch Share Sale
May 26 2016 - 4:40AM
Dow Jones News
MADRID—Banco Popular Españ ol SA will launch a €2.5 billion
($2.8 billion) share sale in an effort to ease investor concerns
about its capital ratio and massive pile of soured property
loans.
Banco Popular, one of Spain's weakest major lenders, said
Thursday the sale will be a rights issue, with shares offered to
existing shareholders at a discount, a common practice in
Europe.
The bank will issue around two billion shares at €1.25 each. The
bank's stock closed at €2.36 on Wednesday.
Banco Popular's shares plunged 23% when they resumed trading on
Thursday morning in Madrid.
The rights issue will allow the lender to boost its capital
level—under international regulations known as "fully loaded" Basel
III criteria—to more than 10.8% by the end of this year, the bank
said.
Banco Popular has been trying to shore up its balance sheet
since Spain's property boom went bust and some investors and
analysts had expected a capital raise at some point this year.
The lender accumulated millions of foreclosed homes and
half-finished property developments after issuing loans to property
developers and home buyers during Spain's building frenzy. The bank
has one of the biggest exposures to the property market among
Spanish lenders.
In 2011, the bank bought regional Spanish lender Banco Pastor
SA, which had failed European regulators' balance-sheet exams. The
purchase strained Banco Popular's own balance sheet and the bank
had to raise €2.5 billion to avoid a state-funded bailout the
following year.
Banco Popular said UBS Group AG and Goldman Sachs Group Inc.
will serve as underwriters on this transaction.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
May 26, 2016 04:25 ET (08:25 GMT)
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