Popular Chairman Saracho Said to Clear Path to Explore Saleby , , and
Spanish bank said to be open to consider share sale as option
Lender will continue with 6 billion-euro real estate spin off
Banco Popular Espanol SA’s incoming Chairman Emilio Saracho has a mandate from the board to be open to strategic options, including a sale, while trying to turn around the business, according to people with knowledge of the matter.
Saracho, a vice chairman at JPMorgan Chase & Co. appointed by the Spanish bank on Thursday, will initially seek to restore investors’ confidence and continue restructuring the business, the people said, asking not to be identified because the deliberations are private. While Saracho plans to continue with the bank’s original plan to shore up its independence through a 6 billion-euro ($6.4 billion) spinoff of real-estate assets, options such as selling new equity to investors will be considered if they become necessary, the people said.
The 61-year-old Saracho was picked for the position over candidates including Endesa SA former Chairman Manuel Pizarro, the people said. Pizarro’s candidacy would have represented a more gradual restructuring pace, one of the people said. Sindicatura de Accionistas de Banco Popular Espanol SA, which represents 9.6 percent of Popular, agreed to support Saracho in exchange for having a preferential right to choose a candidate for the newly created first vice-presidency position in the coming weeks, one of the people said.
Madrid-based Popular is under pressure to reduce its 27.7 billion euros of real estate assets and regain investor confidence with the shares down 67 percent this year. Popular’s executives are currently meeting potential financial creditors for the new company that will hold the assets, which will be a first milestone before getting the regulators’ approval for the real-estate divestment, the person said.
Saracho was elected to take the reins from Angel Ron, chairman for more than a decade, at an extraordinary meeting this week. The bank will ask shareholders to approve Saracho’s appointment in the first quarter and Ron will continue as chairman until the hand-off is complete.
A spokeswoman for the bank, who asked not to be identified in line with its policy, declined to comment when contacted by phone Saturday. Pizarro didn’t reply to a request for comment made through a press officer at El Corte Ingles SA, where he is a board director.
Popular’s stock has declined 27 percent to 89.7 euro cents in the last three months, making it the worst-performing share in the Bloomberg Europe 500 Banks and Financial Services Index in the period.