Santander buys Spain¡¯s struggling Banco Popular for €1
Takeover was approved after EU banking authorities deemed the lender was set to fail
Spain¡¯s Banco Santander has bought the struggling Banco Popular for one euro in order to prevent its collapse, according to a statement released on Wednesday morning by the European Union¡¯s Single Resolution Board (SRB).
The decision was taken after a week that saw Popular shares plummet. According to the European Central Bank, Popular was ¡°failing or likely to fail.¡± The takeover has been endorsed by the European Commission.
Trading in Popular shares has been suspended and shareholders will lose 100% of their investment
¡°The decision taken today safeguards the depositors and critical functions of Banco Popular. This shows that the tools given to resolution authorities after the crisis are effective to protect taxpayers¡¯ money from bailing out banks,¡± said Elke K?nig, chair of the SRB, in the statement.
Trading in Popular shares has been suspended and shareholders will lose 100% of their investment in the lender. Until now, Banco Popular¡¯s listed value had been around €1.3 billion, but that figure has evaporated following the sale for the symbolic price of one euro. Around 300,000 investors are affected by the move.
Santander will raise €7 billion in capital in order to absorb the struggling bank, according to a filing with the National Securities Commission (CNMV).
This is the first such decision adopted by the SRB since it became an independent agency in January 2015 with the mission to ¡°avoid bail-outs and worst-case scenarios.¡±
¡°The Single Resolution Board (SRB) has transferred all shares and capital instruments of Banco Popular Espa?ol S. A. (Banco Popular) to Banco Santander S. A. (Santander),¡± reads the SRB¡¯s statement. ¡°This means that Banco Popular will operate under normal business conditions as a solvent and liquid member of the Santander Group with immediate effect.¡±
The takeover is considered to be ¡°in the public interest as it protects all depositors of Banco Popular and ensures financial stability.¡±
Like many other Spanish lenders, Popular had suffered from exposure to bad loans following the slump in the property market after a decade-long boom that ended in early 2008. In June 2012, the Eurogroup approved up to €100 billion for Spain to recapitalize the country¡¯s banks.
Santander statement
In a statement of its own, Santander underscored that the takeover will be conducted ¡°without any taxpayer support.¡±
¡°The combination of Santander and Popular creates Spain¡¯s largest bank by lending and deposits, with 17 million customers,¡± says the Santander statement.
¡°The combination of Santander and Popular strengthens the Group¡¯s geographic diversification at a time of improving economic conditions in both Spain and Portugal, and will allow us to continue to deliver for customers and shareholders on all our commitments,¡± said Santander chairwoman Ana Bot¨ªn.
.English version by Susana Urra.
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