MADRID, May 26 (Reuters) - Spain's sixth-largest lender Banco Popular said on Thursday it plans to issue around 2 billion new shares at 1.25 euros ($1.40) per share to strengthen its balance sheet, improve profitability and protect its dividend.
The bank will raise up to 2.5 billion euros through the issue, which it said will allow it to accelerate real estate divestment and report a fully-loaded core capital of over 10.8 this year and at least 12 percent in 2018.
Following the rights issue, the bank said by 2018 it expects a return on tangible equity of at least 9 percent and aims to pay at least 40 percent of dividend in cash.
Germany's Allianz aims to take more than 53.4 million shares to hold 3 percent stake in the bank, Popular said. ($1 = 0.8943 euros) (Reporting by Jose Elias Rodriguez; Writing by Paul Day)