Banco Santander SA has acquired a Spanish competitor, Banco Popular Español SA, for just €1 ($1.13). The European Central Bank had determined Banco Popular was near collapse,
a
Wall Street Journal
report noted.
The sale of Banco Popular was the first sale of a lender engineered by Europe’s Single Resolution Board, a new authority created to deal with failing banks.
The combined entity will be Spain’s largest bank, with 17 million customers, the
Journal
report said.
Santander’s bid was successful because it did not ask for state guarantees against any hidden losses incurred by Banco Popular,
a
Financial Times
report said.
The
FT
said the sale confirms that Santander’s executive chairman, Ana Botín, has inherited the dealmaking instincts of her late father, Emilio Botín. The deal will enable Santander to overtake its competitors in small-business lending, the report said.
The move is a risky one for Santander, which had already been in talks to buy Banco Popular. Santander plans to launch a rights issue to raise €7 billion to support the buyout and boost Banco Popular’s balance sheet as part of the €7.9 billion Santander is setting aside to cover Banco Popular’s non-performing assets,
a CNBC report said.
There is also a risk of litigation by Banco Popular shareholders, the
FT
noted. (Sources:
Wall Street Journal
,June 8, 2017;
Financial Times
, June 8, 2017; CNBC, June 7, 2017.)
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