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UPDATE 1-Spain's Santander launches Popular rights issue at 19 pct discount
July 3, 2017 / 10:03 PM / 5 months ago

UPDATE 1-Spain's Santander launches Popular rights issue at 19 pct discount

* Santander launches 7.1 bln euros rights issue

* Sets price at 4.85 eur/share, or 19 pct discount

* Expects H1 net profit of 3.6 bln euros (Adds details, background)

By Jesús Aguado

MADRID, July 3 (Reuters) - Spain’s Banco Santander on Monday launched a 7.1 billion euros ($8.07 billion) rights issue at a price of 4.85 euros per share, a move it had flagged last month when it took over rescued peer Banco Popular for a nominal euro.

Based on Santander’s closing price of 6.002 euros on Monday, the 1.46 billion new shares will be issued at a discount of 19 percent and existing shareholders will have until July 20 to decide whether they use their preferential subscription right to buy or not into the capital increase.

Banco Santander, Citigroup and UBS will act as joint coordinator for the deal, which has been fully underwritten, Santander said in a notice to Spain’s market regulator.

The bank, whose shares have risen 3.5 percent since it bought Popular, said its net profit for the first half of the year would be 3.6 billion euros, up 24 percent from last year, while revenues would increase 7 percent on the period.

The euro zone’s biggest lender by market value also said its core Tier-1 fully loaded capital ratio had likely ended June at 10.7 percent, compared to 10.66 percent in March.

This does not take into account the acquisition of Popular, for which Santander has said it would set aside 7.9 billion euros to cover for bad property assets.

It said it expected the Popular deal to increase its non-performing loan ratio to 5.4 percent of total loans from 3.74 percent at end-March, though this remain below most of its Spanish peers. ($1 = 0.8801 euros) (Editing by Julien Toyer)

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