“Don’t Panic” Banco Popular Tells Employees After Stock Crashes Most On Record
by Tyler Durden
ZeroHedge.com
Jun 3, 2017
It is increasingly likely that Italy (which has been busy bailing out various insolvent banks while pretending it isn’t) won’t be the first nation to try out Europe’s new BRRD “bail-in” insolvency directive. Instead, that honor may go to Spain where the sixth-largest bank, Banco Popular plunged the most in 28 years amid investor concerns that the bad debt-laden bank may have to liquidate as neither a buyer nor a new capital raise appear likely.
As discussed yesterday, the underlying problem with Popular, as with most European banks, is familiar: the bank has been unable to sell €37 billion of nonperforming property loans fast enough, and is racing to find a partner after Spain’s Economy Minister Luis de Guindos declined to consider a public bailout, while a capital increase has faced resistance from existing shareholders. The bank has said previously it could extend a June 10 deadline for binding takeover offers. So far none have emerged, which has prompted concerns about a deposit run, and – in circular fashion – sent the bank’s asset prices crashing, which in turn is prompting depositors to pull even more money out of the bank, and so on…
But besides depositors, the plunge appears to have also spooked the bank’s own employees, and today Spain’s Expansion paper reports that Banco Popular Chairman Emilio Saracho sent a letter to staff assuring them the bank remains solvent after Friday’s stock crash. In the letter, Saracho says the bank is facing “difficult circumstances, but we’re making the greatest effort to overcome them.” Furthermore, the Chairman says that Popular has a number of options, citing a possible capital increase or corporate deal. What he didn’t say is that the reason why the stock is where it is, is because the market no longer believes either of these options is credible.
The Rest…HERE
