Banco Popular plans 2.5 billion euro capital boost

MADRID - Agence France-Presse

A man withdraws money from an ATM at a Spanish Banco Popular branch. REUTERS photo

Spain’s fifth-biggest bank Banco Popular will raise up to 2.5 billion euros ($3.2 billion) to meet capital requirements after a major audit of the country’s financial sector, it announced yesterday.

“The board of Banco Popular in a meeting yesterday reaffirmed its commitment to the bank’s independence and agreed to carry out a capital increase of up to 2.5 billion euros,” it said in a statement.
The Spanish stock market authority suspended trading in Banco Popular’s shares on the Madrid market following the announcement.

The government on Sept. 28 unveiled the results of an independent audit of its banking sector, struggling with mountains of bad loans from the collapse of a building boom in 2008.

Of the 14 major banks audited, seven were found to need fresh capital to secure them against a possible worsening of economic conditions, including Banco Popular which auditors said needed 3.2 billion euros overall.

It said yesterday that its new capital plan requires it to make 9.3 billion euros’ worth of provisions on its balance sheet and the plan had the support of various investment banks.