Spanish banks focus on capital-hungry Portuguese lenders in the region

Bloomberg

Spanish banks are gobbling up a growing slice of Portugal’s
financial industry, taking advantage of the country’s halting
recovery from Europe’s debt
crisis.
CaixaBank SA, a Barcelona-based giant, is the latest pursuer, offering about 900 million euros ($1 billion) last month for the portion of Oporto-based Banco BPI SA that it doesn’t own.
The deal would mark the third Spanish banking purchase in Portugal in less than six months, and may not be the last.
“Portuguese banks need to cut costs and raise capital and they have little capacity to do so on their own,” said Diogo Teixeira, chief executive officer of Optimize Investments, a Lisbon-based firm managing about 120 million euros. “It’s better to have a solid shareholder.”
The takeovers, which have raised hackles in Portugal, reflect Spain’s larger and faster-growing economy as well as the diverging fortunes of the nations’ bailed-out banking industries.
While Spain set up a bad bank and forced its weakest lenders into a painful cleanup, Portuguese banks, after recognising roughly 40 billion euros of impairments, still have among the highest proportion of bad loans in the euro region.
Portuguese authorities are also still picking up the pieces after the collapse of Banco Espirito Santo SA. The cornerstone of one of the country’s largest family dynasties, the lender had to be saved in 2014 at a cost of 4.9 billion euros.
After trying and failing to sell the surviving business carved out of Banco Espirito Santo — called Novo Banco SA – the Bank of Portugal is putting it up for sale again. Spain’s biggest lender, Banco Santander SA, and Banco Popular Espanol SA have indicated they plan to take a look.
For Spanish banks, Portugal represents an avenue for growth in a familiar consumer-banking market with scope for branch closings and cost savings, said Arturo Bris, a professor at the Lausanne-based IMD business school.
“This is a low-risk extension for us,” CaixaBank CEO Gonzalo Gortazar said after announcing the BPI bid. “It’s the first international acquisition that we’ve done, but we know BPI very well and we trust them.”
The Spanish lender already owns 44 percent of the
Portuguese bank.
In other deals, Santander bought rescued lender Banif-Banco Internacional do Funchal SA in December, while Madrid-based Bankinter SA snapped up Barclays Plc’s banking operations in Portugal earlier this year.
If the CaixaBank deal goes through, Spanish lenders will hold about 27 percent of Portugal’s more than 400 billion euros of banking assets.
Bancopopular-e, an online bank owned by Varde Partners and Banco Popular, had
announced on Thursday that it agreed to buy Barclaycard operations in Spain and Portugal from Barclays.