Banco Santander SA agreed to buy Banco Popular Espanol SA for a nominal €1 ($1.13) after European regulators determined that the troubled lender was likely to fail and ordered it to be sold, Bloomberg reported. Santander will raise about €7 billion through a rights offer to bolster Popular’s balance sheet, it said in a regulatory filing on Wednesday. The lender will acquire all of Popular’s stock plus shares resulting from the conversion of its co-cos and Tier 2 instruments for the €1 price, imposing losses on the stricken bank’s shareholders. Popular’s €37 billion of non-performing assets, the legacy of reckless real estate-linked lending ahead of Spain’s property crash, drained profit and capital, forcing new Chairman Emilio Saracho to say in April that the bank would need to sell new shares or find a buyer. The situation had deteriorated in recent days, with the bank losing about half its market value. The transaction will generate a return on investment of 13% to 14% in 2020 and add to earnings per share by 2019, Santander said.
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