Sareb’s Shareholders Approve €2,170M Subordinated Debt Conversion

9 May 2016 – El Economista

On Friday, Sareb’s General Shareholders’ Meeting approved the proposed conversion of €2,170 million of its subordinated debt into share capital.

Through this operation, Sareb addresses the capital requirements resulting from the new accounting framework, which entered into force last year, according to a statement made by the bad bank.

The entry into force of the new regulations required Sareb to individually value its assets, said the company. After an “intense” valuation process, it concluded that it should undertake a clean up process amounting to €2,044 million, in addition to the provisions (€968 million) already recognised in the last two years.

No more capital

A few months ago, the company announced that it would address the losses generated from this clean up effort using its own funds, without resorting to new capital contributions.

In this sense, the General Shareholders’ meeting has approved the conversion of subordinated debt amounting to €2,170 million into capital. Following this operation, Sareb’s own funds will amount to just €953 million and its subordinated debt will amount to €1,429 million.

Meanwhile, the General Shareholders’ Meeting also approved the appointment of Javier García-Carranza as a proprietary Director, representing Banco Santander. Carranza is the Deputy CEO and Head of Restructuring, Real Estate, Investments and Private Equity at the Cantabrian entity.

Original story: El Economista

Translation: Carmel Drake