Banco Santander has acquired Banco Popular following an auction in which Santander was selected as the successful bidder, paying a notional consideration of €1.
As part of the transaction, Santander will complete a rights issue for a total amount of €7bn. This will cover the capital and provisions required to strengthen Popular’s balance sheet, Santander said.
Following the acquisition, Santander will become Spain’s leading bank by both lending and deposits, serving over 17 million customers with a credit market share of about 20%.
The combined business, which will operate under the Santander brand, will have a 25% market share in SME lending in Spain – a key driver of economic growth for the country.
Growing the SME franchise in Spain is a key strategic priority for the group, Santander said.
In Portugal, the integration of Popular with Santander Totta will accelerate growth and strengthen market shares in both lending and deposits, enhancing Totta’s position as the leading privately owned bank in the country, with over 4 million customers.
The acquisition is expected to generate a return on investment of 13-14% in 2020, and an increase in Earnings Per Share (EPS) in 2019.
Santander will make additional provisions for non-performing assets of €7.9bn, including €7.2bn for real estate. This will increase coverage for real estate assets and real estate non-performing loans from 45% to 69%, significantly above peer average (52%).