Santander acquires Banco Popular for one euro

  • ECO News
  • 7 June 2017

After Brussel's ultimatum, Santander acquired Banco Popular for one euro. There was no resolution for the Portuguese branch owned by Banco Popular; that branch is now a part of the Santander Group.

Santander acquired Banco Popular for one euro after Brussel’s ultimatum, within a resolution measure. The operation was made public by the Spanish CNVM and the Portuguese regulator this Wednesday’s morning. In that press release, Santander says they will also move forward with a seven billion euros’ capital increase to cover capital and provisions needed to strengthen Banco Popular. The Portuguese branch owned by Banco Popular was not subject to resolution and is included in the sale, which means it will also be a part of the Banco Santander Group, states the Bank of Portugal in a press release.

In a press release sent this Wednesday, the European Central bank stated they chose a resolution decision: “The purchase price paid by Santander for the shares and capital instruments of Banco Popular is 1 Euro”. The same press release states: “Due to its recent stressed liquidity situation, the European Central Bank (ECB) had decided that Banco Popular was “failing or likely to fail” on 6 June 2017 and notified the SRB accordingly”.

At around 7 a.m., the operation was brought forward to the market by Banco Santander, stating they would take over 100 per cent of Banco Popular Español’s shares and debt at a symbolic price of 1 euro and carry out its own 7 billion euros’ share-raising to “cover the capital and the provisions required to reinforce the balance sheet of Banco Popular”.

The Bank of Portugal clarifies this resolution decision will have no impact in Portugal: “This measure does not imply any change to the business of Banco Popular Portugal, which continues operating as usual, within a new banking group”. The same press release adds: “This solution does not envisage financing from national entities and protects the savings placed with Banco Popular Portugal, ensuring the continuity of financial services provided in Portugal and the financing of the economy”.