Mexican investors eye Spain's Banco Popular

MADRID (Reuters) - A company representing Mexican investors said on Monday it was in advanced talks to acquire up to 20 percent in Spain's Banco Popular (POP.MC), boosting the latter's share price by up to 9 percent.

A stake that size would cost 2.3 billion euros ($3.6 billion) at Popular's market capitalization of 11.4 billion euros, according to Reuters data. Popular is Spain's third largest bank behind Banco Santander (SAN.MC) and BBVA (BBVA.MC).

A statement to the Spanish stock exchange regulator on behalf of a company called Blueprime said it had already signed a deal with one Popular investor, represented by Spanish investor Trinitario Casanova, to acquire a 3.5 percent stake for 14.20 euros per share.

"No other agreements have yet been signed, although agreement is close to being finalized with a number of other shareholders with whom we are in advanced negotiations," the statement added.

Popular closed up 4.6 percent at 9.80 euros, easing from an earlier high of 10.24 as the market digested news that a bidder was prepared to pay a premium for a stake in the bank, which is seen as increasingly vulnerable to a takeover bid.

"The bank is without doubt in a vulnerable position at the moment as the economic slowdown takes its toll on lending volumes while also pushing up non-performing loan levels," a foreign asset manager said.

Popular shares have been volatile since Spanish press reports earlier this month said Mexican investors were interested in buying into the bank.

Mexican telecoms operator Axtel (AXTELCPO.MX) denied reports that the company or its chief executive, Tomas Milmo, intended to make an offer for a stake in Popular.

According to Spanish media reports, Milmo was in talks with Popular's minority shareholders, including Ram Bhavnani, Nicolas Osuna and Portuguese businessman Americo Amorim.

None of the shareholders were available for comment on Monday but they have previously denied any talks over the sale of their shares in the bank.

Popular has also insisted that it is unaware of any negotiations with shareholders.

Popular is seen as particularly exposed to the end of Spain's construction boom as its business in Spain is key to revenue.

Last week, the chairman of the Spanish Banking Association, Miguel Martin Fernandez, said loans in Spain will slow to a level "in line with nominal GDP growth," compared with rates of over 20 percent in the past few years.

"As sector consolidation gathers pace across Europe, banks like Popular are bid targets," said the asset manager.

MARKET SCEPTISM

Analysts, however, expressed skepticism over the likely outcome of Blueprime's move to enter Popular.

"We don't like the look of this operation," said a Madrid-based analyst. "Nobody knows who is behind the operation, or why such a high premium is being offered."

Blueprime's move on Popular is dependent on it securing buy options for at least 20 percent of Popular, as well as the relevant regulatory approval.

According to Spanish law, Blueprime is required to obtain permission from the Bank of Spain to acquire any stake which implies a significant influence on the bank.

Acquiring a stake of this size would require permission from the Bank of Spain, a process which could take up to three months.

(Reporting by Judy Macinnes and Sarah Morris; Editing by Quentin Bryar, Paul Bolding)