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Banco Popular Said to Seek 10 Banks to Underwrite Share Sale

Banco Popular Espanol SA (POP), the Spanish lender that’s seeking as much as 2.5 billion euros ($3.2 billion) in a share sale, plans to hire at least 10 banks to guarantee the offering, said people with direct knowledge of the talks.

Banco Santander SA (SAN), Deutsche Bank AG and JPMorgan Chase & Co. (JPM) will probably run the sale, one person said. Over a dozen other banks have been approached, including Bank of America Merrill Lynch, Citigroup Inc. (C) and UBS AG (UBSN), the people said, asking not to be named as the discussions are confidential. Popular, Spain’s sixth-largest lender, should announce the names of underwriters tomorrow, they said. A spokesman for Banco Popular said that no final decision has been made, and that one is expected by tomorrow.

Popular is offering the stock to existing shareholders as it attempts to avoid taking state aid to cover a 3.2 billion- euro capital shortfall revealed in a stress test. Danske Bank A/S (DANSKE), Denmark’s largest lender, is among European banks that have sought cash from shareholders to improve capital levels.

Officials at JPMorgan, Bank of America and UBS declined to comment. Officials at Santander and Citigroup were not immediately available for comment.

Rights sales in Europe, the Middle East and Africa have raised $22 billion this year, compared with $36 billion in the same period in 2011, according to data compiled by Bloomberg.

Popular posted a 23 percent drop in third-quarter profit last month on provisions to cover bad loans.

The sale may go ahead at a discount of at least 40 percent to the share price at the time, Chief Financial Officer Jacobo Gonzalez-Robatto said in a news conference last month.

The bank will fix terms for the sale when shareholders meet to approve it on Nov. 10, and the company plans to conclude the offering by Dec. 6, Gonzalez-Robatto told analysts the day of the results.

Popular fell 1.7 percent to 1.13 euros at 13:54 p.m. in Madrid. The stock is down 68 percent this year, valuing the lender at 2.5 billion euros, which is also the amount it’s trying to raise with its offering of stock.

To contact the reporters on this story: Ruth David in London at rdavid9@bloomberg.net; Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Jacqueline Simmons at jackiem@bloomberg.net

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