CaixaBank SA, Spain’s third-biggest bank, said it would issue bonds exchangeable for Repsol SA that would enable it to free up capital by reducing its stake in the oil company.
CaixaBank will issue about 620 million euros ($832 million) of the bonds exchangeable into shares equivalent to as much as 2.5 percent of Repsol, the Barcelona-based lender said in a filing to regulators today. Assuming the exchange takes place, the bank plans to boost its core capital ratio incorporating the complete, or “fully loaded,” criteria under Basel III rules, now at 8.3 percent by 37 basis points, CaixaBank said.
CaixaBank is among Spanish lenders including Banco Bilbao Vizcaya Argentaria SA that have been reducing their stakes in companies as they adapt to the new capital rules known as Basel III that can punish them for holding them. CaixaBank holds 12 percent of Repsol, the bank said.
The three-year bonds will carry a fixed nominal interest rate of 4.5 percent to 5 percent, CaixaBank said. The lender said it could opt to exchange as much as 2.5 percent of Repsol, pay cash or a combination of the two options. Citigroup Inc. and Morgan Stanley are acting as joint bookrunners for the transaction, it said.
BBVA said last month it would take a 2.3 billion-euro charge for reducing its stake in China Citic Bank Corp. to free up capital. CaixaBank said earlier year it would reduce its stake in Mexican billionaire Carlos Slim’s Grupo Financiero Inbursa SAB for the same reason.