MADRID Nov 28 Banco Popular cleared a
major hurdle for the reform of Spain's financial system after it
announced on Wednesday it had fully covered its 2.5 billion
euros capital increase.
The capital raising by Spain's sixth-biggest bank was an
attempt to avoid seeking state aid after an independent audit of
Spanish banks found it needed an extra 3.2 billion euros to
weather a serious economic downturn.
It was also a key test of Spanish banks' ability to tap
markets, and some market participants compared it with last
year's 3.1 billion euro initial public offering (IPO) at
state-rescued Bankia that collapsed in value.
Popular was the largest non-nationalised Spanish entity to
fail the September stress test after it was hit hard by a
property crash that started four years ago.
Earlier on Wednesday, the European Commission approved the
recapitalisation plan of four nationalised Spanish banks,
clearing the way for 37 billion euros ($48 billion) of European
funds to be pumped into Spain's troubled lenders.
The International Monetary Fund (IMF) said on Wednesday that
Spain's financial sector reform was on track and all deadlines
have been met so far, but difficult steps remained while risks
for the economy and the country's lenders remain high.
Banco Popular said its five biggest shareholders - Barrie
Foundation, German insurer Allianz, French bank Credit
Mutuel, Portuguese businessman Americo Amorim and investment
fund Union Europea de Inversiones - subscribed 20.8 percent of
the new shares, or 520 million euros, more than the 420 million
euros initially foreseen.
Before the capital increase, the core shareholders held 24.5
percent of the lender.
No figure were provided of how much each of the core
shareholders would hold after the capital increase. Final
details will be published on Dec. 4, while the new shares will
begin trading on Dec. 6.
Popular also said retail investors, which held around 49
percent of the bank's shares before the deal, strongly backed
The lender however had to offer a 64 percent discount to
attract investors, more than the discount of up to 55 percent
that analysts had initially anticipated.
The operation was guaranteed by a group of banks led by
Deutsche Bank and Santander.
Shares in Popular closed up 9 percent on Wednesday. The
stock has fallen around 70 percent since the start of the year.
($1 = 0.7733 euros)
(Editing by Julien Toyer and Tim Dobbyn)