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[LONDON] Banco Santander SA is testing investor appetite for soured loans and repossessed property assets with a face value of as much as 15 billion euros (S$23.2 billion), in a sign that the company is racing ahead with its plan to clean up Banco Popular Espanol SA's balance sheet, according to three people with knowledge of the situation.
Santander acquired the assets when it bought stricken lender Popular last week, said the people, who asked not to be identified because the matter is private. The Spanish bank is also preparing the sale of commercial property assets valued at as much as 500 million euros, the people said. Spain's biggest lender paid 1 euro for Popular in a sale brokered by European regulators after it suffered a run on deposits. Santander said it would raise 7 billion euros in capital to shore up Popular's balance sheet and embark on a rapid sale of its property. Popular has 29.8 billion euros of property assets and soured real estate loans, according to a presentation on Santander's website.
Real estate assets that may be sold include Popular's new headquarters and the Beatriz building in Madrid, whose tenants include KKR & Co., the people said. Also on the block are 1,000 rented homes, land parcels and offices in Madrid and Barcelona, two of the people said.
Santander Chairman Ana Botin told Bloomberg TV last week that her plan to turn around Popular includes the goal of selling at least half of Popular's real estate assets in the next 18 months. Popular's troubles reached a crisis point as doubts about the scale of its real estate losses scared away would-be buyers and its plunging share price made raising capital impossible.
The proposed sales are separate from a process Popular had in place before it was taken over to divest a 480 million-euro batch of non-performing loans backed by 16 hotels across Spain, the three people said. The deadline for bids for those loans was June 9.