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July 4, 2017

Banco Santander launches €7bn rights issue for Banco Popular acquisition

Spanish banking group Banco Santander has launched a €7.1bn rights issue to support its recent takeover of local lender Banco Popular Espanol.

Santander will issue 1,458 million new shares to existing shareholders at a price of €4.85 per share.

The bank said that it will have a fully loaded CET1 ratio of about 10.7% following the rights issue.

At the same time, the bank expects to report attributable profit of around €3.6bn for the first half of 2017, a 24% surge from the previous year. The integration of Banco Popular, announced last month, would have a minimal impact on its profit, Santander said.

The Banco Popular purchase contributes nearly €82bn in net loans and €65bn in deposits. The bank non-performing loan ratio is 20%. Santander said that its acquisition of Banco Popular will take its non-performing loan ratio to around 5.4% and its coverage ratio to 70%.

Banco Santander group executive chairman Ana Botin said: “The acquisition of Popular is a unique opportunity to accelerate our strategy in Spain and Portugal. We expect it will deliver excellent returns for the bank and its shareholders, while providing important stability for Popular’s customers and the Spanish economy.

“We expect the acquisition will enhance all our key financial performance measures for the group from 2019 and beyond, generating a return on investment of 13-14% by 2020.”

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