Spain's Popular ready to face crisis - report

MADRID, March 7 (Reuters) - Banco Popular (POP.MC) is one of the best prepared Spanish banks to confront economic crisis, its chief executive said in a newspaper interview published on Saturday, adding that its bad debt levels were under control.

"Within Spanish banking, Banco Popular is among the best prepared because we have access to strong capital since we raised capital earlier when we did not need it," Chief Executive Robert Higuera told newspaper Cinco Dias. "We have liquidity and we are efficient, crucial factors in facing the situation calmly," he said. "We entered this crisis better prepared (than before previous crises)."

Popular shares have fallen 45 percent in the year to date and underperformed most other Spanish banks by around 10 percent in that time.

As the bank posted a 17 percent fall in 2008 profits in January, Higuera announced a preference share issue to lift its tier 1 ratio to around 8.5 percent from 7.06 percent at the end of last year.

Spain's third biggest bank has one of the highest exposures to the crisis-hit property sector. Problem debtors include developers Martinsa Fadesa (MFAD.MC), which suffered the worst default in Spanish history, and Colonial (COL.MC) in which it took a 9.2 percent stake in a debt-for-equity swap.

It has also appointed the ex-CEO of property firm Reyal Urbis to manage its burgeoning portfolio of property assets bought from developers and which home-owners having trouble paying. Its Aliseda property wing amassed 1.4 billion euros of assets last year.

"We have an elevated bad debt level, but a controllable one," Higuera said. "The bad debts we have we can manage calmly, although we have a problem in the background which is the instability of the markets. They are erratic and sensitive to any piece of news." Higuera said Popular aimed to grow lending, strengthen areas like its insurance business and cut costs. He said Popular would continue closing branches. (Reporting by Ben Harding, editing by Mike Peacock)