Santander bails out Spain’s fourth-largest bank for €1

Spain’s fourth-largest bank is being rescued by Santander, which paid a nominal one euro to acquire the struggling lender.

Banco Popular, based in Madrid, has been around since 1926 but ran into deep trouble over 37 billion (£32 billion) of bad loans ahead of a Spanish housing market crash.

The European Central Bank had warned Popular was insolvent due to the toxic loans and would be wound down.

Instead Santander, which bought up various struggling UK banks, including Abbey to build a presence here, will raise 7 billion to boost Popular’s finances.

“The decision taken today safeguards the depositors and critical functions of Banco Popular,” said Elke König, chair of the Single Resolution Board, an EU agency that winds down stricken banks.

Santander chairwoman Ana Botin (pictured) said the combination of the banks would strengthen the group’s geographic reach as the economy in Spain and Portugal improved.

“We welcome Banco Popular customers,” she said.

In February Banco reported an annual loss of 3.5 billion.