7 September 2017 – RTVE
The financial institution Liberbank is going to increase its share capital by €500 million to “accelerate” the reduction in its real estate portfolio and improve its profitability. The bank, which resulted from the merger between Cajastur-Banco CCM, Caja Cantabria and Caja Extremadura, has set itself the objective of divesting its real estate and doubtful assets, amounting to €800 million, before the end of the year, according to a note submitted to Spain’s National Securities and Exchange Commission (CNMV) on Wednesday.
Liberbank has announced this operation as the prohibition period for the short selling of its shares is due to come to an end. The ban was imposed by the CNMV after naysayers set their sights on the entity following the intervention of Banco Popular and its subsequent purchase by Santander.
On 12 June, the National Securities and Exchange Commission initially established a trading restriction lasting one month, after Liberbank’s share price fell by 40% in just one week, due to the effect of Popular. It then extended the ban for two more months, until 12 September.
The General Shareholders’ Meeting will analyse the capital increase on 9 October
Liberbank’s Board of Directors will propose the €500 million capital increase for approval at the next Extraordinary General Shareholders’ Meeting due to be held on 9 October.
The intention is “to accelerate” its strategic objectives and plan to improve profitability by strengthening its balance sheet and improving its risk profile. Currently, retail mortgage risk accounts for 60% of the entity’s total credit investment, according to Europa Press.
Specifically, the entity expects the default rate to amount to 3.5% by 2019 and for the ratio of foreclosures to fall below 9%; it also expects the coverage ratio to increase to around 50% by the same date.
The forecast return on equity (ROE) is 7% for 2019 and 8% for 2020. The entity plans to pay remuneration to shareholders, which it will charge to the P&L in 2018 with a payout of 20%, which will increase to 40% in 2020.
The major shareholders support the operation
The entity’s major shareholders, which together account for around 68.8% of the total share capital, such as Oceanwood (with a 12.6% stake), Aivilo – Ernesto Tinajero (7.4 %) and Corporación Masaveu (5%), together with the Banking Foundations (43.8%) support this operation and have already expressed their intention to participate in the capital increase, confirmed the bank.
At the end of trading on Wednesday, Liberbank’s shares were trading at €0.97, after increasing by 0.21% during the day. The company’s total share capital amounts to €900.54 million, according to Efe.
Original story: RTVE
Translation: Carmel Drake