Banco Popular said to study measures to boost liquidity
madrid — Banco Popular Espanol is reviewing how to bolster liquidity drained by deposit withdrawals and a deterioration of its credit, according to people familiar with the matter.
The Madrid-based bank, racing to sell assets and find a buyer, plans to meet on Tuesday with the European Central Bank to discuss options, the people said, asking not to be identified as the plans are private. The lender may request additional central bank loans, one of the people said. It’s also considering seeking oversight from central bank officials to guide the board’s decisions should it not obtain the extra liquidity, the person said.
The bank won’t confirm or comment on its meetings with the ECB, which have no specific agenda, a spokesman for Popular said by phone on Friday. Chairman Emilio Saracho sent a letter to Popular staff as the markets closed, assuring them the bank remains solvent following a week of turbulence, the newspaper Expansion reported.
The firm has put itself up for sale as soured real estate weakens its finances, with the stock losing about 38 per cent of its market value this week. The company has raised at least €209 million ($234 million) in recent weeks by selling its remaining stake in Targobank — a joint venture with France’s Credit Mutuel — as well as a minority stake in real estate company Merlin Properties Socimi.
The shares plunged more than 17 per cent for the second day in a row, closing at €0.41 in Madrid. Banco Popular’s €750 million of 8.25 per cent AT1 notes were down less than one cent on the euro to 55 cents, according to data compiled by Bloomberg.
TotalBank talks
Banco Popular has sold treasury shares, along with additional Tier 1 notes issued by itself and other lenders, people with knowledge of the matter said last week.
The lender is also in talks to sell its US unit TotalBank to Chile’s Banco de Credito e Inversiones, people with knowledge of the matter said in April. The unit could be valued at about $500 million, the people said.
The new chairman, Saracho is on a mission to salvage the stricken lender and was also considering a share sale as an alternative to a sale. The lender, which shunned a bailout in 2012, has seen its capital eroded by mounting losses on the €37 billion of non-performing assets still piled up on its balance sheet. Still, deposits only fell one per cent in the first quarter, the bank said on May 5.