MADRID, 29 Feb. (EUROPA PRESS) -
The board of directors of BBVA has given the green light to an issue of preferred shares eventually convertible ('CoCos') into the bank's ordinary shares for a maximum nominal amount of 1,500 million euros "or its equivalent in any other currency", excluding of the shareholders' preferential subscription right, as reported by the entity to the National Securities Market Commission (CNMV).
In the reports on the issue that the bank has made available to shareholders, BBVA explains that the reason for this issue is to maintain "adequate" management margins, above the requirements that apply to it, reinforcing in turn, compliance with maintaining a minimum volume of own funds and admissible liabilities, known as the MREL regulatory requirement.
Additionally, there is also a subordination requirement that requires entities to comply with part of their MREL requirement with a minimum percentage of subordinated instruments.
"These types of issues are recurring and common by credit institutions, which have been carrying out numerous operations of this type in all world markets since, in 2013, BBVA carried out the first issue of these characteristics to comply with regulations. of solvency with the objective of being able to efficiently attend to its AT1 (Tier 1 capital) needs," says the entity.
Last September, BBVA placed an AT1 convertible contingent bond (CoCo) for $1 billion. In addition, the entity decided in the middle of this month to early amortize 'CoCos' issued in 2019 for a value of 1,000 million euros.
The bank affirms that this new issue of up to 1,500 million euros will allow it "a prospective and orderly management of market expectations as well as the maturities and early redemption options of the AT1 issues that it currently has in circulation, guaranteeing in all moment to comply with its solvency requirements efficiently and, eventually, taking advantage of the market circumstances existing at all times".
For all these reasons, the entity points out, "it is advisable" to have prior authorization that allows for a new issue of AT1 instruments to be able to take advantage of appropriate situations in economic and market terms, in order to be able to carry out the issue at the time it is consider appropriate.
The report on the issue has been prepared by BBVA's Finance area, which in turn has been supported by a report prepared by BNP Paribas, a "top-level investment bank with recognized experience in this type of issues", as well as in the legal report of J
These reports on the issue will be communicated to the ordinary general meeting of shareholders that BBVA will hold, expectedly on second call, on March 15.
According to the entity, the maximum expected nominal amount of this issue is 1,500 million euros or its equivalent in any other currency, with a nominal value of at least 100,000 euros for each value. It is planned that the placement of the securities will be carried out through a market prospecting or 'book-building' procedure aimed collectively at the institutional market, through which the price of the issue will be determined based on the market offers received. .
The holders of the issue, which will be perpetual and, therefore, without a maturity date, may receive a non-cumulative remuneration that will be determined based on the interest rate applicable to the nominal amount of the securities.
These will be converted into newly issued BBVA ordinary shares when the CET1 ratio of the issuer or its consolidated group is less than 5.125%, calculated in accordance with solvency regulations or any other regulations applicable to BBVA at any time.
Likewise, the securities may be converted into newly issued ordinary BBVA shares if it adopts any measure that results in the approval of a reduction in its share capital.
The conversion price will be equal to or higher than the market price of the BBVA share at the time of conversion of the securities, and may not in any case be lower than the unit nominal value of the bank's ordinary shares.
At the time of adoption of the issuance agreement, an increase in share capital will be agreed in the amount necessary to cover the eventual conversion of the securities. The maximum number of BBVA shares to be issued to carry out the conversion will be determined by the quotient between the total nominal amount of the issue and the conversion price.
The bank indicates that, for now, it is not possible to determine the exact amount of share capital that will be necessary to be able to attend to the eventual conversion of the securities, since this will depend on the final nominal amount of the issue and the conversion price.
However, considering that the issue has a maximum nominal amount of 1,500 million euros (or its equivalent in any other currency) and that the conversion price may not be less than 3.75 euros (or its equivalent in any other currency) , the maximum number of new ordinary shares that would need to be issued would reach 400 million titles.
