Spanish bank Sabadell to raise 913 mn euros

Sabadell, Spain’s sixth biggest by market value, said Monday it plans to raise 913 million euros ($1.22 billion) through a share sale as it seeks to strengthen its balance sheet.

The bank, which agreed in December to acquire loss-making nationalised lender Caja de Ahorros del Mediterraneo for a symbolic one euro in an auction arranged by the Bank of Spain, said it will issue 691.81 million new shares at a price of 1.32 euros each.

Shares in Sabadell closed Monday at 2.43 euros. Sabadell shareholders will have the option to buy three new shares for every seven existing shares they hold, the bank said in a statement.

Earlier this month Spain’s new conservative government approved a law that obliges Spanish banks to set up a financial safety net totalling 50 billion euros to cover their exposure to toxic real estate loans and assets accumulated during a construction boom that went bust with the global financial crisis.