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Spain's Banco Popular to Increase Capital by $3.2 Billion

Sunday, 30 Sep 2012 03:46 PM

The board of Spain's Banco Popular has approved a capital increase of up to 2.5 billion euros ($3.2 billion), a source close to the process said on Sunday, after an audit showed the bank had capital needs of as much as 3.2 billion euros.

The directors of the bank, Spain's sixth-biggest by assets, also agreed that Popular would remain independent rather than searching for a partner, the source said.

"The increase will be made imminently, in the next few days or weeks," the source said.

More details of the bank's new strategic plan are expected to be announced shortly, the source added.

Popular declined to comment.

The bank was highlighted in an independent audit by consultant Oliver Wyman as one of the lenders that would need extra capital to ride out a serious economic downturn.

The report, issued on Friday, said Spanish banks would need a total of 59.3 billion euros in extra capital in such a scenario.

The Oliver Wyman report said Popular's estimated capital needs were based on the adverse scenario, which is looking increasingly likely with Spain in its second recession in three years and a quarter of all workers unemployed.

Spain has agreed a credit line that could provide up to 100 billion euros in European Union rescue funds for its banks. ($1 = 0.7773 euros)

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