Crédit Mutuel is scoring points in Spain

The crisis creates opportunities that have to be seized whilst the iron is hot. This is what Crédit Mutuel CIC has just done in Spain. An affiliate for two years now of Banco Popular, having acquired its French subsidiary, the group headed up by Michel Lucas is stepping up a gear.

Crédit Mutuel CIC will make two attractive acquisitions in Spain, with investments of around 600 million euros. First with 312 million, it will acquire 50% in a joint subsidiary to which Banco Popular is contributing a network of 123 branches and a business worth de 2 billion euros in loans and 1.7 billion in deposits with a shareholders' equity ratio of 13%.

But above all this association will be strengthened by Crédit Mutuel CIC's forthcoming acquisition of 5% of Banco Popular's share capital. An additional investment of around 300 million at the current price. The French group is taking advantage of the financial crisis which has seen Banco Popular's share price fall 68% in three years and 28% in one year.

Nevertheless although the Spanish bank, which operates mainly in the retail sector, was affected when the Spanish bubble burst, it still remains one of the most profitable and best capitalised in the country.

With a network of 2336 branches, a Tier one core ratio of 8.74% and a sharp in increase in deposits in the first quarter (+21%) combined with a levelling-off of provisions for doubtful debts, Banco Popular is without doubt one of the most attractive recovery stocks in the sector.

The stock market slump has brought its PER down to 9.4 times the expected profits this year and 7.8 times the 2011 forecast. These figures are 25% lower than those of Bankinter, a smaller bank in which Crédit Agricole acquired 20% of the share capital, at a high price, several years ago.

Finally, with 5% of the share capital, Crédit Mutuel CIC will be the leading and only major bank shareholder of Banco Popular after the German insurance company Allianz (9.3%) and the Portuguese king of cork, Amorim (7%). Something to set a date for in the future whilst the syndicate representing 2,000 shareholders, and close to Opus Dei, holding 13% of the share capital has been weakened by the crisis.