Banc Sabadell extends its capital by 10% and sets its 'core capital' at 8.88%

The Catalan bank Banc Sabadell reaches the 8% milestone by issuing 126.4 million new shares, which represent 10% of its capital. The movement is part of the bank’s strategy to strengthen its capital, foreseeing the future stress tests and the Basel III rules.


February 1, 2011 10:32 PM

Barcelona (ACN) .- The Catalonia-based bank Banc Sabadell has taken another positive step forward in its strategy of active capital management and in strengthening the balance sheet based on the guidelines of “Basel III” rules. This Monday it raised 410.7 million euros (the equivalent of 10% of its capital) after successfully placing 126.4 million new shares with institutional investors. With this operation, the bank will strengthen its top quality capital, the ‘core capital’, and it will be set at 8.88%. Banc Sabadell's core capital stood at 8.20% at the end of the 2010.  At the end of the third quarter it was 7.84%. This capital increase was a success as within only three hours all the shares were placed, something that shows in difficult times like the present, the interest that this expansion has aroused among international institutional investors (more than 90% of buyers). It also highlights the recognition that Banc Sabadells' trajectory of growth and solvency deserves.

The recorded high demand, which rose to 180% of the offer (almost 240 million shares) meant a set price of 3.25 euros per share could be set, meaning a discount, compared to yesterday's closing, which was 6.9%, a percentage that is lower than what is normally registered for such placements.

The bank will use the funds obtained in this expansion to launch a buyback cash offer of issuing debt (shares and subordinated bonds). They were issued by Banc Sabadell in 2006 and 2010 and now make up of Tier I capital and Tier II, respectively.

Last week Spanish Economy Minister Elena Salgado said that all Spanish lenders would have to have a core capital level of at least 8.0% by September, more than the 7.0% required under new international "Basel III" rules that were agreed last year.