A PYMNTS Company

Spain: Santander launches US$8 billion stock issue for Banco Popular purchase

 |  July 4, 2017

Banco Santander launched a €7.1 billion (US $8.0 billion) rights issue to raise funding for its clean-up of troubled lender Banco Popular Espanol, which it took over last month during a central bank-orchestrated rescue.

Santander executives had said they would issue roughly that amount when the bank bought Banco Popular for a nominal one euro on June 7. The rights issue, offers shares to existing shareholders at a discount, a common practice in Europe.

Santander, one of Europe’s largest lenders, said it will have a fully loaded CET1 ratio (a measure of solvency) of around 10.7% after the rights issue lower than peer banks but higher than the 6% required under international regulations known as Basel III criteria.

Group executive chairman Ana Botin said: “The acquisition of Popular is a unique opportunity to accelerate our strategy in Spain and Portugal. We expect it will deliver excellent returns for the bank and its shareholders, while providing important stability for Popular’s customers and the Spanish economy. We expect the acquisition will enhance all our key financial performance measures for the group from 2019 and beyond, generating a return on investment of 13-14% by 2020.”

Full Content: Digital Club

Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.