MADRID, June 7 (Xinhua) -- Spain's Banco Santander has bought on Wednesday struggling Banco Popular for 1 euro (1.12 U.S. dollars), the bank reported.
"The acquisition takes place following an auction", Banco Santander stated, "in which Santander was selected as the successful bidder, paying a notional consideration of 1 euro", it added.
The European Central Bank (ECB) had said on Tuesday Banco Popular was "failing or likely to fail".
Santander has reported that it would complete a rights issue for 7 billion euros to cover the capital and provisions to strengthen Banco Popular's balance sheet.
Banco Popular shares lost more than a half of their value over the last week and Santander has announced it would make additional provisions for non-performing assets of 7.9 billion euros (7.85 billion U.S. dollars) in order to bring Popular's provisions and capital in line with the rest of the Group .
According to Santander, the integration of both banks will "enhance Santander's franchises in both Spain and Portugal" becoming the leading bank in the former by both lending and deposits with over 17 million clients.
"The acquisition is expected to generate a return on investment of 13-14 percent in 2020". Banco Santander said, adding that "the combined business will benefit from increased profitability with strong potential for further revenue growth".
Spain's Minister of Economy said on Wednesday that the takeover was "a good outcome", highlighting that it was carried out without using "public funds" and "ensures the maximum protection for depositors and the continuity of the bank's activity".