MADRID?Banco Popular Españ ol SA's board said on Thursday it plans to replace longtime Chairman Á ngel Ron, a step forward for Spain's most troubled major bank, which has been unable to clean up a balance sheet mired in profit-sapping foreclosures and bad loans taken on during the country's 2008 property boom-gone-bust.
Banco Popular had become a black spot on Spain's thorough cleanup of its banking system since the downturn. Other major Spanish lenders that helped tofuel the country's lending and building binge have been quicker to sell soured property assets at a loss and move on. Banco Popular, on the other hand, is still struggling with around ?32 billion ($32.9 billion) in bad loans and other nonperforming assets. The bank's market value is around ?3.8 billion.
Mr. Ron became executive chairman in October 2004 and Banco Popular's shares have fallen around 96% since then. He has been reluctant to have the lender swallowed by a competitor, bankers and investors say. His exit paves the way for the bank's potential acquisition, which would likely accelerate the sale of the its nonperforming assets by the acquiring bank?easing a risk to Spain's banking system.
Shares were up around 9% at 12.30 GMT on news of Mr. Ron's exit and on reports by local media that larger Spanish banks had expressed interest in acquiring the lender. Banco Popular said in a regulatory filing that board members expected J.P. Morgan Chase & Co. executive Emilio Saracho Rodrí guez de Torres to replace Mr. Ron as executive chairman in the first quarter of next year.
Still, a takeover isn't a given?the bank could continue to muddle along independently.
Banco Popular's balance sheet could give some potential suitors pause because there are doubts about how much more in loan-loss provisions the bank needs. At least one potential buyer, Spain's Banco de Sabadell SA, has walked away.
Pressure has been building on Mr. Ron after the bank raised ?2.5 billion through a rights issue in May in a bid to quiet investor concerns that it didn't have enough funds to effectively provision for its bad loans. Unconvinced that the fresh capital was enough to plug Banco Popular's provisions shortfall, and following weaker-than-expected third-quarter results, shares continued to fall.
Write to Jeannette Neumann at email@example.com
(END) Dow Jones Newswires
December01, 2016 08:15 ET (13:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.