How one of Spain’s most prestigious banks ended up being sold for… 1 Euro?

Economy Nilgun Salim
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Spanish banking giant Banco Santander is set to buy Banco Popular Espanol, one of the most powerful banks in the Spanish banking system, for 1 euro, according to Bloomberg.

Santander wants to gather seven billion euros in capital, with which they should secure the financial stability of their deal.

Banco Popular Espanol ran out of time when it came to repairing their huge balance sheet ‘holes’ after struggling with mortgage loans and suffocating capital holdings.

FT compared the situation of Banco Popular with a poker game: Banco Popular assets are a bargain for those who love to risk.

According to FT, even these low prices might save the delicate situation.

How did the prestigious institution ended up in this mess?

Reportedly, the main cause would be those uninspired investments in the real estate sector and bad management, writes Bloomberg.

The analysts from the Algebris Investments believe Banco Popular will need another 3-4 billion euros to cushion possible losses.

The institution last year commissioned 5.7 billion euros for losses.

Bank President Emilio Saracho has time until the end of summer to find a buyer and avoid the intervention of the European Banking cleaning mechanism.

The Spanish newspaper Vozpopuli writes that Popular is preparing to sell a 1.5-2 billion euros real estate portfolio.