BCP approves a capital increase of 1,300 million euros

  • ECO News
  • 10 January 2017

The Portuguese bank BCP Board of Directors approved this Monday the cooptation of two new administrators and the increase of 1.3 billion euros in the bank’s capital.

The board of directors from the Portuguese bank BCP held an extraordinary meeting to approve the appointment of two new administrators, and also to decide to move forward with a capital increase of 1,300 million euros. This operation, which will begin on January 19 and end on February 2, will be made through the issuing of new shares with a 38.6% discount.

Through the capital increase, the bank will be able to reimburse the Portuguese state in advance, avoiding the risk of having the state as shareholder; the repayment of the 700 million euros loan has already been approved by the European Central Bank. Also, with this new cash it will push its core Tier one capital ratio to 11%, above the minimum required by the ECB.

The bank’s new shares will be sold with a 38.6% discount, which should pressure the upcoming sessions: overall, BCP will issue over 14 billion new shares, with a subscription price of 0.094 per share, as stated in a press release by the bank headed by Nuno Amado. In the first day of trading after the announcement of this capital increase, the titles touched a new historical low at 90 cents after a sharp fall of 16%.

“The subscription price represents a discount of approximately 38.6% to the theoretical ex-rights price based on the closing price of BCP shares on Euronext Lisbon on 9 January 2016”, was stated this Monday in the document disclosed by the CMVM (Portuguese Securities Market Commission).

BCP adds that “each holder of BCP’s ordinary shares will receive one subscription right for each ordinary share it owns”, which means each shareholder is entitled to subscribe 15 new shares (14.7) issued in the capital share increase.

Fosun has already made a commitment to the BCP to subscribe enough shares to hold 30% equity of the Portuguese bank, compared to the 16.67% they now hold. The reinforcement of the shareholder structure should require an investment between 400 million and 530 million euros. Sonangol, the other major shareholder of BCP, didn’t disclose what will they do.