Spain’s hemorrhaging Banco Popular bought by Santander for €1
BANKING heavyweight Santander has agreed to buy toxic lender Banco Popular for just €1, saving the giant from total collapse.
By Lana Clements, published on The Express, on June 7, 2017
Spain’s biggest bank must now inject around £6.1billion worth of cash into the bankrupt lender to cover its book of disastrous property loans.
Santander will ask its investors to stump up the cash for the rescue plan, after the European Central Bank declared Spain’s sixth largest bank was insolvent and would be wound down.
Europe’s rules now ban taxpayer money being used to bail out banks that run not crisis, without retail investors also taking a hit.
Banco Popular shareholders have lost everything, while senior holders of the bank’s debts have been spared.
It is the first bank to be affected by Europe’s new bank bailout rules.
Shareholders recently started to run on the bank as it appeared there was no end in sight for Banco Popular’s troubles.
The ECB said a “significant deterioration of the liquidity situation of the bank in recent days” meant it “would have, in the near future, been unable to pay its debts or other liabilities.”
It comes as some of Italy’s lenders have faced similar problems over the last year.
But Rome is resisting forcing losses on investors, many of whom are ordinary Italian savers.
Spanish economy minister Luis de Guindos said Santander’s takeover was a good outcome for Popular and would have not impact the Government or other banks.
Santander chairwoman Ana Botin said: “We welcome Banco Popular customers.”