MADRID (AP) — Spain’s Banco Santander is paying the symbolic sum of 1 euro to take over local rival Banco Popular, a long-troubled lender whose shares lost more than half of their value over the past week.
In a statement on Wednesday, Santander said it will take over all the stock in Banco Popular, which had 305,152 shareholders as of the end of March. It will raise around 7 billion euros ($7.9 billion) in a share issue “to reinforce the balance sheet of Banco Popular.”
The takeover was conducted in an auction sanctioned by the European Commission after the main banking regulator in the eurozone, the European Central Bank, said this week it believed Popular was “failing or likely to fail.”
Madrid-based Popular has been struggling with 7.9 billion euros ($ 8.9 billion) in non-performing assets, including 7.2 billion euros ($8.1 billion) in real estate. As confidence waned in Popular, shares in the bank fell about 38 percent last week and another 20 percent this week, to 0.32 euros per share before regulators halted trading in its shares ahead of Wednesday’s market opening.
The sale is “in the public interest as it protects all depositors of Banco Popular and ensures financial stability,” said the European agency that manages failing banks in the 19-country eurozone, of which Spain is a member.
The Spanish government had previously ruled out bailing the bank with taxpayers’ money. On Wednesday, Economy minister Luis de Guindos said the sale was “a good outcome” given the shortfall of the lender over the past weeks. The takeover “ensures the maximum protection for depositors and the continuity of the bank’s activity,” said De Guindos.
With the takeover, Santander becomes the largest Spanish bank by lending and deposits, reaching 17 million customers. The investment also covers Popular’s assets in Portugal, bringing Santander’s total customers in the neighboring country to 4 million.
“The combination of Santander and Popular strengthens the Group’s geographic diversification at a time of improving economic conditions in both Spain and Portugal,” said Santander Chair Ana Botin. Santander said that the deal would not materially affect the Santander’s financial health and that it expected to generate returns on its investment of 13-14 percent in 2020.
Santander’s shares fell 3 percent in early trading and then recovered to stand 0.4 percent lower at 5.77 euros.
“Spain’s Banco Santander is paying the symbolic sum of 1 euro to take over local rival Banco Popular,…”
Sounds like a jew’s wet dream to me.