Banco Popular Español SA may need to be wound down if it fails to find a buyer, a key European bank watchdog has warned, Reuters reported May 31.
The report said that Single Resolution Board chair Elke König had recently issued "an early warning" quoting an unnamed EU official.
"Koenig has said ... that the Single Resolution Board is following the (Banco Popular) procedure with particular attention with a view to a possible intervention," the news agency quoted the official as saying, adding that the bank's merger bid "may be fruitless."
Popular has been struggling with heavy losses as it seeks to reduce a bad debt pile of almost €37 billion, largely linked to real estate assets accumulated during Spain's property bubble.
The bank's Executive Chairman Emilio Saracho told shareholders April 10 that the bank would need to raise capital to meet regulatory requirements or it may decide to merge with another bank. The bank said May 16 that it had received "preliminary" expressions of interest from several entities.
Popular's board was meeting May 31 and was expected to discuss potential bids. The bank was expected to make a statement later in the day.