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Santander says Banco Popular to sell 51% of real estate assets to Blackstone

Banco Santander SA said Aug. 8 that Banco Popular Español SA, which Santander took over in June, approved the sale of 51% of its real estate portfolio to Blackstone Real Estate Partners Europe V, a fund run by Blackstone Group LP.

Under the deal, Banco Popular will transfer to a newly created company assets with a gross book value of about €30 billion, along with 100% of Banco Popular's real estate management company, Aliseda. The new company will be 51% owned by Blackstone and 49% owned by Banco Popular, and the assets will no longer be consolidated on Popular's balance sheet.

Santander said the deconsolidation of assets would boost its common equity Tier 1 fully loaded capital ratio by 12 basis points. It also said 5 basis points of capital consumption resulting from Popular's recent acquisition of 51% of Aliseda will be released.

The assets are valued at about €10 billion, consistent with the valuation and provisions made by Santander at the time of Popular's acquisition, and will not result in any material capital gain or loss, Santander said.

The European Commission gave the green light Aug. 8 for Santander to go ahead with its acquisition of Popular. The EC said in a separate statement that the purchase "would not raise competition concerns."

Popular was acquired by Santander on June 7 after the European authorities deemed the bank "failing or likely to fail" as Popular succumbed under the weight of €36.8 billion of nonperforming assets. Santander has been looking for a buyer for the bank's problem loans.