Santander planning bid for ailing Banco Popular

Shares in Banco Popular have dropped 53% since the beginning of last week, giving the company a market value of 1.33 billion euros. It is unclear how much a bidder would pay for the company.

Santander would most likely use a stock sale to boost its capital levels, which would be eroded by absorbing the heavy real-estate loans of Banco Popular.

If the sale were to go ahead, Santander would have assets close to 471 billon euros and would overtake Caixabank as the leader in Spain.

Ana Botín, who heads up Santander, has always admired Banco Popular's business with small and medium-sized enterprises and thinks that buying the company could be a good opportunity for Santander, according to financial sources.

If the bid were to go ahead, it would be the first cooperative operation by Ana Botín since she was appointed president of Banco Santander in 2014 and an coup for Spain, since Brazil and the UK became the driving forces within the group.

BBVA and Bankia are also interested in Banco Popular, so the market was unsurprised by Santander's interest. Botín's group has enough backing from investors to raise this amount of capital, despite raising 7.5 billion euros barely two years ago.

Despite it's real estate exposure, Popular's core business, centered on small and medium-sized businesses has always been highly valued by the rest of its competitors.