Spain’s Banco Popular to sell off assets to boost depleted capital

The new management of Spain’s Banco Popular is looking at selling its credit card business Wizink and USfranchise TotalBank to boost its capital after the bank lost €137mn ($150mn) in the first three months of the year.In Popular’s first results under new chairman Emilio Saracho, it set aside €500mn in quarterly provisions as it continues to clean up €37bn of toxic real estate assets accumulated during Spain’s financial crisis.To raise funds to cover the provisions, chief executive Ignacio Sanchez-Asiain, who joined in April, said Popular would sell off assets outside its core banking business in Spain. Asked whether Popular would sell off Wizink and TotalBank, Sanchez-Asiain said the bank would consider offers and hoped to close the TotalBank deal this year.“Wizink is a very attractive asset due to its profitability and growth.That said, at the right price we could sell it,” Sanchez-Asiain told a a news conference.Popular’s 49% stake in Wizink, which it set up in 2014 with US investment firm Varde Partners, is valued at around 1bn euros, according to analysts at UBS.Florida-based TotalBank is valued at €400mn, they said.Chairman Saracho is seeking to draw a line under the management of his predecessor, Angel Ron, and said last month the bank could undertake another capital hike after a €2.5bn raise last year and consider a merger deal.In 2016, Popular, which has undergone three leadership shake-ups since last July, posted a €3.5bn loss, which yesterday it revised up by €130mn.The bank said it expected to return to profit this year.In a sign of the new management’s change in strategy, Sanchez-Asiain said yesterday Popular had “totally abandoned” a plan proposed by Ron to spin-off €6bn of non-performing real estate assets into a separate unit.Popular shares opened down 5% but later reversed their losses and were 3% higher by 1200 GMT as analysts welcomed a slight reduction to its non-performing asset portfolio, the largest among Spanish banks and the prospect of asset sales.Its shares have been the worst performers on the European STOXX banking index in the last six months and have lost 60% over the past year. Spain’s sixth biggest lender said net interest income — a measure of earnings on loans minus deposit costs — was €500mn , down over 9% from a year ago and 3% from the previous quarter, and just below analysts’ forecasts.It ended March with a fully-loaded capital ratio — a closely-watched measure of a bank’s strength — of 7.33% compared to 8.17% at the end of December.It is the lowest among listed Spanish banks, although it is above regulatory requirements.Analysts said the slip in capital was more evidence that the bank needed to raise more money.“It’s a long way back from such a low CET1 ratio,” RBC Capital Markets analyst Benjamin Toms wrote in a note, referring to Popular’s capital.