Fallen Angel brings hope for action at Banco Popular

By:
Dominic O’Neill
Published on:

A new chairman, alongside a recently installed CEO, could help the Spanish bank clean up its troubled balance sheet.

Angel Ron-R-600
Banco Popular chairman Angel Ron will remain in place until early next year

The demise of the veteran and much-maligned chairman of Banco Popular was a long time coming before it was made official on Thursday.

Rumours of a fight between Angel Ron and a Mexican shareholder group led by billionaire Antonio del Valle were already rife as Popular went back to the market to ask for more capital in a €2.5 billion rights issue this June, only three years after raising €450 million from the Mexicans.

Former CEO Francisco Gomez ceded to former Santander and Deutsche Bank insider Pedro Larena this summer, but this was apparently not enough to stop Del Valle’s departure from the board in late September, in what was taken as another sign of tension with Ron, the chairman of 15 years standing.

As Popular continued to post losses and its shares continued to collapse after this summer’s raising, Ron could cling on no longer. Even independent director and novelist Reyes Calderón called for his head, according to local media.

Worst affliction

Ron will remain in place until early next year, which is when Larena is hoping to go to market and get ECB approval for a spin-off of real-estate assets that might unburden the bank’s balance sheet of its worst affliction.

However, when new chairman Emilio Saracho comes on board, the market will be waiting for an investment bankers’ approach to rapid action from this former head honcho at JPMorgan in Spain.

Yet the spin-off itself, and particularly its funding, is beset by difficulties: the crux of the matter is to pass on risk that investors will be unwilling to take.

Perhaps the best that can be hoped for is a merger with a bigger and healthier institution, but despite the attractiveness of its SME franchise, Popular will find it hard to attract suitors while the legacy of its late-cycle foray into real-estate development continues to hang around its neck.

See the full article on Banco Popular in Euromoney’s December edition, to read more on what could be the way out of crisis for Spain’s most troubled bank.