Spain’s Banco Popular to sell off assets

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THE NEW management of Banco Popular is considering selling its credit card business ‘Wizink’ and U.S. franchise ‘TotalBank’ to boost its capital after the bank lost €137 million in the first three months of 2017.

In Banco Popular’s first results under new chairman Emilio Saracho, it set aside €500 million in quarterly provisions as it continues to clean up €37 billion of pernicious real estate assets accumulated during Spain’s fiscal crisis.

To raise funds to cover the provisions, Chief Executive Ignacio Sanchez-Asiain, who joined in April, said Popular would sell off assets outside its core banking business in Spain.

Asked whether Popular would sell off Wizink and TotalBank, Sanchez-Asiain confirmed the bank would consider offers and hoped to close the TotalBank deal this year.

‘Wizink is a very attractive asset due to its profitability and growth. That said, at the right price we could sell it,’ Sanchez-Asiain told a news conference.

Popular’s 49 per cent stake in Wizink, which it set up in 2014 with U.S. investment firm Varde Partners, is valued at around €1 billion, according to analysts at UBS.

Analysts valued Florida-based TotalBank at €400 million.

Chairman Saracho is seeking to draw a line under the management of his predecessor, Angel Ron and said last month the bank could undertake another capital hike after a €2.5 billion raise last year and consider a merger deal.

In 2016, Popular, which has undergone three leadership shake-ups since last July, posted a €3.5 billion loss, which on Friday it revised up by €130 million. The bank said it expected to return to profit this year.

In a sign of the new management’s change in strategy, Sanchez-Asiain said on Friday Popular had ‘totally abandoned’ a plan proposed by Ron to spin-off €6 billion euros of non-performing real estate assets into a separate unit.

Popular shares opened down 5 per cent but later reversed their losses and were 3 per cent higher by midday as analysts welcomed a slight reduction to its non-performing asset portfolio, the largest among Spanish banks and the prospect of asset sales.

Spain’s sixth biggest lender said net interest income – a measure of earnings on loans minus deposit costs – was €500 million, down over 9 per cent from a year ago and 3 per cent from the previous quarter – just below analyst’s forecasts.

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