"Don't Panic" Banco Popular Tells Employees After Stock Crashes Most On Record

It is increasingly likely that Italy (which has been busy bailing out various insolvent banks while pretending it isn't) won't be the first nation to try out Europe's new BRRD "bail-in" insolvency directive. Instead, that honor may go to Spain where the sixth-largest bank, Banco Popular plunged the most in 28 years amid investor concerns that the bad debt-laden bank may have to liquidate as neither a buyer nor a new capital raise appear likely.

As discussed yesterday, the underlying problem with Popular, as with most European banks, is familiar: the bank has been unable to sell €37 billion of nonperforming property loans fast enough, and is racing to find a partner after Spain's Economy Minister Luis de Guindos declined to consider a public bailout, while a capital increase has faced resistance from existing shareholders. The bank has said previously it could extend a June 10 deadline for binding takeover offers. So far none have emerged, which has prompted concerns about a deposit run, and - in circular fashion - sent the bank's asset prices crashing, which in turn is prompting depositors to pull even more money out of the bank, and so on...

But besides depositors, the plunge appears to have also spooked the bank's own employees, and today Spain's Expansion paper reports that Banco Popular Chairman Emilio Saracho sent a letter to staff assuring them the bank remains solvent after Friday's stock crash. In the letter, Saracho says the bank is facing “difficult circumstances, but we’re making the greatest effort to overcome them." Furthermore, the Chairman says that Popular has a number of options, citing a possible capital increase or corporate deal. What he didn't say is that the reason why the stock is where it is, is because the market no longer believes either of these options is credible.

More from the latter, courtesy of Expansion, google translated:

"From the management we are aware that the information that is being published affects the work and the spirit of each one of you, but our obligation as professionals is to focus on the day to day and on the clients, since the activity of the bank must continue as it has so far" begins the statement, whose target is the Professional Association of Directors Banco Popular.


The central message of this letter sent yesterday is the following: "Banco Popular remains solvent and has positive net worth".


"Our bank is in a difficult situation," says Saracho. "For this reason and in order to meet the regulatory requirements that the European Central Bank demands for next year and guarantee our strength and future, we are working on different alternatives.


"Our customers and our shareholders are the most important thing for us, and for this reason we must send them a message of confidence and confidence that we are making every effort to overcome this situation," the letter concludes.

In short, Saracho urged the bank's group of 1,800 managers to continue working hard; saying business activity should go on as normal, and that it was important to instill confidence in clients and shareholders. Unfortunately, one look at the bank's recent surge in default risk as seen in its senior bond CDS, suggests that "those who panic first", may be doing the smart thing...


Lumberjack SoDamnMad Sat, 06/03/2017 - 09:32 Permalink

Breaking: Toyota Divorces Tesla….


Reuters) – Toyota Motor Corp (7203.T) said on Saturday it had sold all shares in Tesla Inc (TSLA.O) by the end of 2016, having canceled its tie-up with the U.S. luxury automaker to jointly develop electric vehicles.



In reply to by SoDamnMad

BritBob Sat, 06/03/2017 - 09:30 Permalink

Will the Spanisg government play the Gibraltar distraction card? From the top down: - Spanish king uses the address of the UN demand to Great Britain return Gibraltar(RT 22 Sep, 2016 )PM  Rajoy- Gibraltar "this is the such territory in Europe and that affects to our own integrity territorial", said the Mr Rajoy, saying that Britain had "ignored the mandate" of the Assembly General of the UN. (Daily Telegraph, 26 September 2013) Foreign Minister Dastis: « I am for "Gibraltar, Spanish", but you have to be smart. (8 feb, 2017 copeaxarquia.es). Gibraltar - Some Relevant International Law: https://www.academia.edu/10575180/Gibraltar_-_Some_Relevant_Internationa...  Ah well, just politics.

DuneCreature BritBob Sat, 06/03/2017 - 10:28 Permalink

Oh, Bob the Bot, you're back. .... Good.

Hold this OT post for me.


OT - Open Source Investigation Of - Seth Rich / WikiLeaks DNC docs / Awan Brothers crime blotter / FBI malfeasance in office, etc, etc.

George is at it again for those who give a fat shit.


Live Hard, I Give More Than A Shit, I Give The Whole USSA Outhouse, Die Free

~ DC v6.0

In reply to by BritBob

CHoward Sat, 06/03/2017 - 09:36 Permalink

I've seen this scenario play over and over throughut the years.  The CEO (or president of the comany) come out publicly and state how good things 'really' are and "we feel good about the future".  This movie always has a sad and sudden end. 

Huh Reeeally CHoward Sat, 06/03/2017 - 10:46 Permalink

It's different this time /s...and for this reason we must send them a message of confidence and confidence that we are making every effort to overcome this situation...Ah yes, confidence, the only thing a con man can sell.Con man, from the Urban Dictionary: One who gains the trust, or "confidence", of his victims (often called marks) in order to manipulate, steal from, or otherwise predate upon themSounds about right.

In reply to by CHoward