MADRID--Spain's Banco Popular Espanol SA (POP.MC) confirmed
Monday that its board of directors has approved a capital increase
of up to 2.5 billion euros ($3.21 billion) to cover a significant
capital shortfall.
Banco Popular said in a filing with the Spanish regulator that
it will hold a webcast with analysts to discuss its capital raising
efforts.
An independent audit conducted by U.S. consultancy Oliver Wyman
found that Banco Popular needed EUR3.2 billion in additional
capital to withstand potential losses in an adverse economic
scenario.
Banco Popular's board, which includes representatives of German
insurer Allianz (ALIZF, ALV.XE) and French lender Credit Mutuel,
unanimously backed the decision on Sunday, according to a person
familiar with the situation.
Such a large capital hike will be highly dilutive for Popular,
which has a market value of EUR3.5 billion. Popular had previously
said it plans to raise some of the capital it needs by selling
assets and retaining earnings.
The Oliver Wyman audit will form the basis for the calculation
of how much Spain will need to draw from a EUR100 billion bailout
from the European Union, and aims to provide a definite estimate of
Spanish bank capital needs four years after the collapse of the
Spanish housing boom.
Write to Santiago Perez at santiago.perez@dowjones.com