16 September 2016 – Expansión
The real estate company that Banco Popular wants to create from a significant portion of the foreclosed real estate assets that it has on its balance sheet, and whose shares will be distributed on a proportional basis amongst its shareholders, without any cost whatsoever to them, will be listed on the stock exchange from the day it is constituted, in such a way that its shares will have the necessary liquidity to enable their owners to do what they deem most appropriate with them.
At the moment, the heads of Banco Popular are focusing their activities on finalising the outstanding details of the design of the operation to create a real estate company, which still does not have a name, but which will incorporate real estate assets with a gross value of €6,000 million, chosen from the foreclosed assets that the bank owns, amounting to €11,140 million, and which form part of the entity’s balance sheet. And it also obtaining the necessary authorisations from the supervisors, the Bank of Spain and the National Securities and Markets Commission, as well as from the authorities at the Ministry of Economy, although the latter is not mandatory.
There is no specific timetable for completing the final phase of the process, but sources close to it indicate that it is hoped that it will become a reality during the first half of 2017, and that its launch will be announced sufficiently in advance to allow for a general shareholders’ meeting to be called, where the carve-out of the real estate company will have to be approved, along with the distribution of the shares amongst the bank’s shareholders, as if they were an extraordinary dividend.
The company will start trading on the stock market on the day of its constitution, when its shares will also be delivered to their new owners. It will have its own control and management bodies, which will operate completely independently of the bank. In this sense, a search will soon begin for a Chairman and CEO of the new company and the Board will be formed, almost in its entirety, by independent directors, with financing training and knowledge of the real estate sector.
It has not been ruled out the some of the bank’s main shareholders, who will also be main shareholders of the new company, may want to take a seat on the Board, given their shareholdings, but that is not something that is currently on the table.
The bank reported a foreclosed asset balance worth €11,140 million at the end of June, with a provisioning level that, at the end of this year, will amount to around 50% following the application of the results generated during the year and some of the recent capital increase amounting to €2,500 million, aimed at increasing the bank’s total provisioning level. This means that approximately half of these foreclosed assets (especially homes, offices and retail premises that have been completed and to a lesser extent those still in progress, and a small amount of land under development) will be included in the new company.
The company’s liabilities will be comprised of its capital, which the bank will disburse and transfer to the new shareholders; subordinated debt which Popular will purchase; and external financing for which, according to market sources, there is currently high potential demand, which will be determined on the basis of the return on the bonds issued and the relationship between capital, subordinated debt and the other financing. (…).
Original story: Expansión (by Salvador Arancibia)
Translation: Carmel Drake