Banco Popular’s shares dropped more than 17 per cent to record lows today amid concerns the Spanish lender could be wound down.
With fears growing that no buyer will be found for the bank, its share price had dropped to €0.344 (30p) and is on course to close at an all-time low having fallen nearly 50 per cent in the last week.
Shares also fell sharply last Friday as potential buyers dropped out of the Banco Popular auction process. Final bids are due this week and international publications have reported that Spanish banking rivals BBVA and Bankia are now out of the race.
Analysts estimate that Popular needs at least €4bn more capital, with the bank weighed down by a €37bn pile of toxic property assets.
Reuters reported on 31 May that European banking watchdog the Single Resolution Board had warned the EU that the lender would need to be wound down if it fails to find a buyer.
On Friday, the Spanish government appealed for calm, telling a press conference that Popular “passed its stress tests” and was “in the process of a sale or a capital raise, nothing more. Complete calm. We are going to wait for the next steps.” The government confirmed the solution for Popular is either a capital raise or a sale.
And on Saturday it was reported that chairman Emilio Saracho had told his executives that the lender was solvent, urging calmness and confidence.
“Banco Popular remains solvent and has positive equity,” he said in the letter, seen by Reuters and the Spanish media.
“Our clients and shareholders are the most important for us. For that reason we must relay them a message of calm and confidence that we are trying as hard as possible to overcome this situation.”