New Bank

Banco Popular joins French Crédit Mutuel to create bank

Banco Popular said that its agreement to create a new bank with France's Crédit Mutuel-CIC will enable it to book 367 euro million in pre-tax capital gains, besides enjoying 600 million euro in liquidity.

Each of the two banks will hold a 50-percent stake in the new joint venture and will have "identical political and economic rights," said a spokesperson for Banco Popular.

Crédit Mutuel will also acquire a five-percent stake in Banco Popular "in the coming months."

The deal, said the Spanish lender, will help optimize its resources and help its network, which includes some 2,300 branches. The agreement will also improve Popular's core capital ratio by 16 basis points. The new group will start off with 2.1 euro billion in assets, 2 billion euro in credit and 1.2 billion euro in deposits. It will have 123 branches and 505 employees in Spain.

Spain's third-largest bank by assets noted that the deal will create value for the shareholder and "an optimal structure" to make the most of the opportunities for growth andconsolidation of the Spanish banking system, which is currently undergoing a major restructuring as part of the European Union’s demands for healthy balance sheets. The country's 45 savings banks have been particularly affected by the economic crisis and real estate slump, and several merger announcements have been made in recent weeks, including Caja Madrid's hookup with Bancaja.

(Published by El País – June 29, 2010)

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