Santander acquires struggling Spanish rival Banco Popular

Spanish banking giant Santander has rescued teetering rival Banco Popular by scooping up the Madrid-based bank for just €1 after its shares lost more than half their value in the past week on fears it might be forced into a deeply discounted rights issue.

The European Union's Single Resolution Board has approved the transferal of all the shares and capital instruments of its struggling rival, meaning it will operate under normal conditions as a member of the Santander Group with immediate effect.

Last Friday Popular had postponed the deadline for bidders to submit their offers, with reports in Spanish newspapers that this was due to a lack of interest from potential suitors.

Piling the pressure, Reuters reported that the SRB had warned of the risk that Popular might require an orderly wind-down.

The European Central Bank said on Wednesday morning: “The significant deterioration of the liquidity situation of the bank in recent days led to a determination that the entity would have, in the near future, been unable to pay its debts or other liabilities as they fell due.

“Consequently, the ECB determined that the bank was failing or likely to fail and duly informed the Single Resolution Board (SRB), which adopted a resolution scheme entailing the sale of Banco Popular Español S.A. to Banco Santander.”

The news provided a fillip to UK bank stocks, with RBS, Lloyds Banking Group and Barclays all trading higher on Wednesday.