Spain's Popular to unveil 2.5-billion-euro share issue's terms Saturday
MADRID (Reuters) - Banco Popular (POP.MC) will unveil on Saturday the conditions of a 2.5-billion-euro ($3 billion) share issue that could avert the need for the lender to accept international aid as part of a European bailout of Spain's banking sector.
The country's sixth-biggest bank needs the cash because an independent stress test of Spain's financial system, published in September, showed Popular needed an extra 3.2 billion euros to weather a serious economic downturn.
The share issue, a key test of Spanish banks' ability to tap markets, will likely go ahead at a steep discount to attract investors, with some analysts expecting a cut of as much as 55 percent from current market prices.
Deutsche Bank is lead manager for the sale, Popular said in October.
Core institutional shareholders, like German insurer Allianz (ALVG.DE), have already said they will support the issue. Popular said in October it had already lined up more than a dozen investment banks to underwrite the capital increase, with commitments of up to 7.5 billion euros.
"We could see an offer price of around 0.5 euros a share, but it will definitively go ahead after the Bank of Spain cleared the recapitalization plan and the main shareholders said they would subscribe to it," said Juan Pablo Lopez, banking analyst at Espirito Santo.
However, some brokers expect a smaller discount, given that the shares have already fallen around 30 percent since Popular announced its share issue.
Macquarie Equities Research expects an offer price of 0.7 euros per share, while Madrid-based brokerage Renta 4 estimates an offer price of 0.9 euros per share.
Popular Chief Financial Officer Jacobo Gonzalez-Robatto said in October he expected the discount to be as steep as 50 percent.
Popular shares closed at 1.117 euros on Thursday.
The 2.5-billion-euro share issue is equivalent to 97 percent of Popular's current market capitalization.
The bank expects to effectively launch the share issue next week - on November 13 or November 14 - and complete it before December 6.
An independent audit of the Spanish banking sector in September identified seven out of 14 banks as needing a capital injection in the case of a severe economic downturn, with a funding shortfall of 59.3 billion euros.
A Bank of Spain source said if Popular's share issue was fully subscribed, the lender could join the group of sound banks with no external capital needs.
On October 31, Spain's central bank gave the go-ahead to Popular's recapitalization plan, which has already been submitted to the European Commission.
Spain has been granted up to 100 billion euros of a European aid package for its crippled lenders, which have been severely hit by the collapse of a real estate bubble five years ago that left the banks with toxic property assets of 184 billion euros.
The Spanish government has said it would only need to use 40 billion euros of the euro-zone aid since some banks could meet part of the extra capital needs themselves.
Spanish banks are writing down billions of euros of losses in bad real estate investments under government demands.
Popular's nine-month net profit fell 38 percent to 251 million euros ($325 million) because of writedowns on property assets.
The lender has made 3.9 billion euros of provisions during the first nine months to cover these losses - less than half the 9.3 billion euros of writedowns it must make this year. Popular has said it will book a loss of 2.3 billion euros in 2012.
Aside from the share issue, the bank is also selling assets and scrapping its October dividend to clean up its balance sheet. ($1 = 0.7840 euros)
(Reporting By Jesús Aguado; Editing by Sonya Dowsett and Jan Paschal)
- Tweet this
- Share this
- Digg this
- U.S. strikes have slowed Iraq militants but not weakened them - Pentagon
- IFC launches $2.5 billion rupee-denominated bonds for infra projects in India
- Lack of options leave India struggling with Dhoni dilemma
- Murder, revenge, lust and rampage take over 'Sin City' sequel
- Islamic State video purports to show beheading of U.S. journalist
Addressing India's Infra Needs
The World Bank's private-sector financing arm on Wednesday launched $2.5 billion, rupee-denominated, bonds in the Indian market to fund infrastructure projects, after raising $1 billion in offshore bonds for the sector last year. Full Article
Exclusive - Icahn says Family Dollar wasting over $300 mln in breakup fees . Full Article