Small Spanish lenders Liberbank and Unicaja have become the focus of investors’ concerns after the fall of Popular last week, casting renewed doubts over the strength of some Spanish banks.
Liberbank lost close to half of its stock market value last week and its shares have fallen for 10 straight days. They are now trading at €0.582 each, down 29 per cent on Friday and close to their all-time low of €0.526 in July last year.
Meanwhile, the initial public offering of Unicaja, a regional lender in Andalusia, flagged for before the summer, is seen suffering from both the Popular fallout and the competition of the €7 billion cash call Santander will soon carry out.
Liberbank, which was formed in 2011 from the merger of three regional savings banks and controls around two percent of all Spanish deposits, has been seen as one of the weakest links of Spain’s banking sector for several years despite efforts to sell bad real estate assets and improve its liquidity position.
The bank has a bad loan ratio of 13 per cent, well above most of its peers, and two thirds of its €2.1 billion debt matures by the end of the year with several repayments due in the next two months.
Smaller banks in Spain, including Liberbank, saw their subordinated debt sell off on Thursday in the aftermath of the Banco Popular resolution, with cash prices dropping by multiple points.
In a bid to draw a line under the current selloff, Liberbank Chief Executive Officer Manuel Menendez and Member of the Board Victor Roza bought more than €100,000 worth of shares in the lender last Friday, according to official registries seen by Reuters.
A spokesman for Liberbank said the lender was strong both in terms of liquidity and solvency and the recent selloff was only the result of short-selling from opportunist investors.
Unicaja, which also manages around two per cent of Spanish deposits, enjoys a slightly more relaxed situation.
Its bad debt ratio is just below 10 per cent and a deadline to repay €600 million of subordinated debt and meet legal requirements to list is still months away but banking insiders say pressure is mounting.
“It has always been a complex IPO because the banks lack an equity story,” said a senior Spanish banker. “Most of its business is formed by residential mortgages, which turn very low margins. Either it lists at a very low price or they will suffer to get it done,” the banker also said, adding that he would expect the listing to be postponed.
Unicaja declined to comment.