Banco Popular has new chairman and strategy: could it be a takeover target?

Banco Popular crisisBanco Popular crisis

Emilio Saracho will be appointed as Banco Popular Chairman at today’s Extraordinary Shareholders’ Meeting. The new chairman (ex-deputy chairman at JP Morgan) will very likely revise the bank’s strategic plan, avoiding a new capital hike at least in the short-term.

For Bankinter, the new management’s focus will be on strengthening solvency ratios via the sale of assets. In addition to cutting the high level of unproductive assets (currently around €36 billion), the new strategic plan probably envisages the sale of non-core assets, including the bank’s commercial network in Portugal, its investments in Mexico (25.0% of BX+) and the US (100% of TotalBank), or even the 49% which it has in TargoBank (commercial banking in Spain) or its Private Banking business.

Emilio Saracho will have asked the Chair of the ECB’s Supervisory Board ( Danièle Nouy) for a year to redirect Popular’s strategy and improve its solvency ratios. It’s worth remembering that the bank’s CET I “fully loaded” ratio currently stands at 8.17%, lower than that of its competitors due to the losses recorded in 2016 (-€3.485 billion).

Bankinter believes the measures which Popular’s new Chairman will announce will have a positive impact on the lender’s share price. It reiterates its recommendation for aggressive investors to take an opportunist investment in Popular for two basic reasons: (i) the modification/improvement to the strategic plan will be well received by the capital markets and by the ECB, and (ii) it’s likely Popular will end up being the target of a corporate move, although not until part of the objectives of the new strategic plan have been met.


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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.