Banco Popular gets backing for share sale Banco Popular has secured €8bn in underwriting commitments from investment banks for its planned €2.5bn share sale as the Spanish lender puts forward the deal to be approved by its shareholders this weekend. Popular, which was found by recent stress tests commissioned by the Spanish government to need €3.2bn in new capital in an adverse economic scenario, will make the final selection of the investment banks who will conduct the rights issue on Friday, people close to the deal said. The bank had received proposals from 16 investment banks, which it later reduced to a shortlist of 13, with Deutsche Bank and UBS already selected as one of two lead banks for marketing the rights issue to investors. Popular shareholders will meet for an extraordinary meeting on Saturday to approve the rights issue. The high level of commitments secured from banks to underwrite the sale, which would see them left holding Popular shares if they were unable to sell enough to investors, is viewed by senior executives in the bank as a vote of confidence in the deal at a time when many international banks are scaling back exposure to Spain. Popular has already said that investors holding 24 per cent of the bank's shares have expressed their support for the deal, with Allianz, Crédit Mutuel and Américo Amorim, which control about 14 per cent of Popular's shares, committing to taking up their pre-emption rights to buy new shares. By selling €2.5bn in new shares Popular is hoping to raise exactly its current market value as of Thursday, with investors who are unable or unwilling to take up their rights to buy new shares proportionately to their holding facing heavy dilution. Popular shares have dropped 63 per cent this year as the Spanish government forced the country's lenders to set aside billions of euros in provisions against real estate assets, and concerns over the country's sovereign debt has locked out many banks from wholesale funding markets. Popular was the only bank in Spain that was not already nationalised to be deemed to need new capital under stress tests conducted by the consultancy Oliver Wyman two months ago, with Ángel Ron, the lender's president, having criticised the process before the results were known for adding to uncertainty about the Spanish banking sector. Popular said shortly after the result that it would raise the shortfall through the rights issue, and also by using retained earnings, suspending its dividend for the next financial year and by selling assets. The bank has said it expects to generate €7.2bn in operating profits between this year and 2014, with net profits of €547m next year and €1.41bn for 2014, meaning it feels it has sufficient earnings generation to remain healthy in an adverse economic situation.