THE chief executive of Spain’s sixth largest bank, Banco Popular, has been fired as the under-fire institution struggles to cope with escalating losses on risky real-estate loans taken out over the past decade.
Francisco Gomez Marin will be replaced by Pedro Larena, who is presently a senior executive at Deutsche bank, on September 1, and the bank has also announced plans to cut approximately €175 million in costs throughout the fiscal year, while separating its real estate and banking businesses to provide greater transparency.
“Over the last month, and following the capital increase, the board has assessed the financial challenges and the difficult macroeconomic environment and has decided to open a new chapter by separating the ordinary business from our real estate activity,” said Chief Financial Officer Francisco Sancha.
In June Banco Popular sold €2.5 billion in shares to calm investor panic over significant losses in the second quarter, having reported a profit of just €122,000 compared to €96.5 million in the same period last year.
Banco Popular suffered considerably compared to other banks following the market crash in 2008, having wantonly issued significant loans to headstrong property developers during the boom years. Analysts expect the bank to struggle to pass EU stress tests, the results of which will be released later this evening, July 29.