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September 22, 2017

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Portuguese bank BCP announces capital boost to repay loans

LISBON -- Portuguese bank BCP intends to raise about 2.25 billion euros with a capital issue to repay early loans it received from the state, it said on Wednesday.

The issue, the second by a leading Portuguese bank, will be made at a huge price discount.

The bank, the second-biggest Portuguese bank quoted on the stock market and known fully as Banco Comercial Portugues, intends to use 1.85 billion euros (US$2.5 billion) of the funds raised to repay state loans, the bank said in a statement.

This will leave outstanding loans of 750 million euros which the bank will repay by the beginning of 2016, it said.

In 2012, the state supported the bank with 3.0 billion euros drawn from a package of 12 billion euros under an overall three-year bailout for Portugal totaling 78 billion euros.

Portugal emerged from that bailout program on May 17.

The bank said it would issue new shares at 0.065 euros each. That represents a discount of 59.0 percent on the closing price on Tuesday.

Trading in the shares was suspended on Tuesday afternoon after press reports that the bank was about to announce a capital increase had pushed the stock down 4.58 percent to 0.15 euros.

The announcement comes less than two weeks after the biggest Portuguese bank, BES, successful completed an issue of shares to raise 1.04 billion euros so as to strengthen its balance sheet.

Shares in BES have fallen heavily since an announcement on Friday that its chief executive Ricardo Salgado will leave his job at the end of July amid turmoil over allegations that the bank's holding company concealed a hole in the accounts.

BCP and BES are two of four Portuguese banks undergoing examination by the European Central Bank as part of a new program to test the ability of leading eurozone banks to withstand sudden stresses in the banking system.

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