 have rescued Portugese rival Banco Popular from near collapse, in an acquisition deal worth 7 billion euros.){kind=link}
Santander (LON:BNC) have rescued rival Banco Popular from near collapse, in an acquisition worth 7 billion euros.
The deal will enable Santander to cover Popular existing debts, which are around 2 billion euros more than analysts had initially projected. The Spanish bank bought Popular for 1 euro, after it continued to fall in value as investors feared an imminent collapse.
On Tuesday, the European Central Bank (ECB) categorised Banco Popular as “failing or likely to fail”, as it continued to struggle to re-pay its debts which had been racking up since the 2008 financial crisis.
The ECB said: “The significant deterioration of the liquidity situation of the bank in recent days led to a determination that the entity would have, in the near future, been unable to pay its debts or other liabilities as they fell due.”
Popular posted a 3.5 billion euro loss last year, as the institution continued to struggle to deal with nearly $40 billion (£31 billion) in debts accumulated from faulty property loans.
Santander chairman Ana Botin commented on the prospects of the deal:
“The combination of Santander and Popular strengthens the group’s geographical diversification at a time of improving economic conditions in both Spain and Portugal.”
On Tuesday, the Spanish central bank echoed the sense of optimistic surrounding Spanish economic growth.
Head of the Bank of Spain Luis Maria Linde said the Spanish economy could grow faster in 2017 than previously anticipated, possibly surpassing 3 percent.
“It can’t be ruled out that the growth estimated for this year will be greater than anticipated a few months ago, and could even be above 3 percent,” he said during a speech at Spain’s Senate.
The European Commission have approved the deal on Wednesday, after concluding that the merger would ensure “customers of Banco Popular will continue to be served with no disruption to the economy”.
Shares in Santander are currently are currently down 2.35 percent as of 10.32AM (GMT).