Monday, January 9, 2017

BCP increases capital by 1.3 billion – the Observer

THE BCP approved the execution of a capital increase of eur 1.3 billion, a value that will be used to repay 750 million euros of the loan state that remains and to strengthen the capital. In a statement sent to the market, the bank confirms that the transaction was approved Monday at a meeting of the board of directors.

The capital increase is intended for the current shareholders, who may sell the subscription rights on the market, The largest shareholder of BCP, the chinese group Fosun, has already given a purchase order "advance and irrevocable" in the sense of to increase its participation to 30% of the share capital of BCP. The owner of Fidelity currently has 16,67% of the bank after a transaction made in November of last year. The group undertakes to keep the shares of BCP for three years. According accounts advanced by the Business, Fosun will invest about 400 million euros in the framework of the strengthening of its position in BCP.

Although Sonangol has obtained the authorization of the European Central Bank (ECB) to enhance its participation to 30% of the share capital of BCP, the bank refers to in its statement is not have "information in respect of any decision of the Sonangol with reference to the offer, including how to engage, sell and/or purchase any subscription rights". The angolan oil company, which is undergoing a restructuring process, led by Isabel dos Santos, has 14,87% of the capital of the Portuguese bank.

Another shareholder, a history of the BCP, the Spanish Sabadell, announced the departure of the bank’s capital in December 2016, a divestment which caused a strong concussion in the quotation of the bank.

The information of the increase of capital had been advanced initially by the journal Echo, and a little after four in the afternoon, but was only confirmed by the BCP after 19 hours and after a request for clarification by the Commission of the Securities Market.

The new shares will be issued at a price of 9.4 cents, which represents a discount of 38.6% compared with theoretical value of the shares, to the quotation of the day January 7, discounting already the effect of subscription rights. In addition to the underwriting of Fosun, the placing on the market of the offer of the new shares will be underwritten by a banking syndicate led by Goldman Sachs and J. P Morgan. This transaction is to accomplish, "short-term", and does not need to be approved in the general assembly, a time limit to increase the capital had already been approved on the 21st day of April, last year.

The capital increase is not fully surprising, since the bank had already shown interest to refund the missing loan the public, made through the CoCos (equity instruments convertible). The deadline to repay the tranche of the loan, that lack of 700 million euros, which expires this year, and the operation was already authorized by the ECB.

in addition, the bank wants to strengthen capital ratios — the amount of 1.3 billion gets to do the two things. The capital ratio will rise to more than 11%, fulfilling the requirements of the European Central Bank (ECB). According to the BCP, the ratio of Common Equity Tier 1, taking as reference the situation of the bank on 30 September 2016, will be in the up 11.4%.

The board meeting also served to approve the entry of two new administrators, including João Nuno Palma, ex-financial director of Caixa Geral de Depósitos, in the wake of the entry of the chinese Fosun in capital of the bank. Palm, nominated by Fosun, will have executive functions but there’s more to an administrator, not an executive, of chinese nationality, Lingjiong Xu.


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