Spain's Sabadell completes share swap

 

Sabadell was the only bidder for CAM, which ran up huge losses through indiscriminate lending during a housing boom. The purchase will make Sabadell Spain's fifth-largest bank in terms of assets.

Spain's Banco de Sabadell SA completed a $1 billion share swap on Tuesday aimed at increasing its solvency following its purchase of troubled state-rescued regional bank Caja de Ahorros del Mediterraneo (CAM) in December.

The deal to swap preference shares - which do not count as capital under regulatory guidelines - for ordinary stock will reinforce core capital by 145 basis points, the bank said, to reach 10.55%.

The bank got 94% acceptance for the offer, it said, allowing it to increase core capital by 797 million euros ($1 billion).

Sabadell will issue 223 million new shares to cover the operation, equivalent to 13.8% of its share capital after the offer, and will also use 44 million shares from its treasury stock.

Spanish banks are fending off fears about their solvency as regulators demand higher capital reserves to protect against losses implicated in rotten real estate assets on their balance sheets.

Sabadell shares were 1.6% lower at 0940 GMT, outpacing declines in Spanish banks.