Twist in Spain. The Black Crisis of popular Bank it is resolved with the arrival of a white knight: it is the colossus Santander Bank, who bought the institution in trouble by suddenly banishing the ghost of bankruptcy. The operation takes place at the symbolic price of one euro, but to carry it out Santander (-0,5% today on the Madrid Stock Exchange) will launch a capital increase of 7 billion euros.
The confirmation came with a note from the Single Resolution Board (Srb), the European agency for the exercise of resolution functions, according to which, in the opinion of the ECB, Banco Popular was "unable to pay its debts" and other "obligations ” and therefore was now “on the verge of failure”.
Santander's decision, in collaboration with the Srb and the state restructuring fund Frob (the Spanish resolution authority), was taken "to protect Banco Popular's deposits and ensure financial stability" in Spain and in Portugal, in addition to “avoiding recourse to public funds. The resolution scheme enters into force starting today with the green light from the EU Commission".
CAPITAL INCREASE OF 7 BILLION
Santander will use the seven billion of the capital increase to face the adjustments and losses of Banco Popular's assets, especially on the non-performing loan portfolio. In this way, Santander expects that the acquisition will have a neutral impact on its Cet1 capital index
ELIMINATED SHARES AND SOME BONDS
The transaction avoids the bail in total, but in any case, in accordance with the European BRRD directive on bank resolutions, it will result in the elimination of the value of the shares and Additional Tier 1 instruments bonds, while the Tier 2 bonds will be converted into new shares transferred to the Santander. According to calculations that have appeared in the last few days, the total value of the bond instruments would amount to approximately 1,9 billion euros.
THE COLLAPSE OF THE POPULAR BANK
Yesterday Banco Popular stock lost 6% after Moody's rating cut, while today it is suspended. Since the beginning of the year, shares have fallen by 65%, against the +16% recorded by the Ibex index of the Madrid Stock Exchange. The French group Credit Mutuel, which controls 4% of the capital, has decided to give up its seat on the board of directors of the institution, while in recent days Blackrock had reduced its stake from 4% to 1,7%.
Yesterday the president and CEO of the bank, Emilio Saracho and Ignacio Sanchez Asain, met with the heads of banking supervision of the ECB to try to find a solution to the crisis. But no one on the market had foreseen the flash bailout.
