CaixaBank announces a voluntary tender offer for BPI, conditional upon the removal of voting cap

• The offer, with a price of EUR 1.113 per share, reflects the volume weighted average share price of the last six months and values BPI at EUR 1,622 million.
• CaixaBank has requested the ECB to suspend any possible sanctions against BPI in order to allow CaixaBank to find a solution to the excessive risk concentration issue.

CaixaBank, the leader in Spain's financial market by market share, today announced a voluntary tender offer of EUR 1.113 per share in cash for all the shares it does not own in BPI. The offer by CaixaBank, BPI's largest shareholder with 44.1%, is conditional upon the lifting of the 20% limit on voting rights, on increasing its holding in Banco BPI to over 50% and on obtaining the relevant regulatory authorisations.

It has made this bid after failing to reach a satisfactory agreement with Santoro Finance to resolve the problems of BPI's concentration of risks in Angola. In view of this situation, CaixaBank has requested ECB to suspend all administrative proceedings against Banco BPI related to its excessive concentration of risks in Angola, in order to allow CaixaBank to find a solution to this situation if it should take control of Banco BPI. The bid announced today will strengthen CaixaBank's role as it seeks a solution, while also helping it to improve BPI's profitability as a result of the synergies that will be generated by the future collaboration with CaixaBank.

The price offered by CaixaBank, whose chairman is Isidro Fainé and CEO is Gonzalo Gortázar, values BPI at EUR 1,622 million and reflects the volume weighted average share price of the last six months, meaning that it is considered an fair price according to Portuguese regulations. The bid, which will be registered with the Portuguese Securities Market Commission (CMVM) once the relevant approvals are received and the elimination of the 20% restriction on voting rights becomes effective, is forecast to be completed during the third quarter of the year.

Commitment to the Portuguese market

CaixaBank, which entered the Portuguese market 21 years ago when it took a stake in BPI, will continue supporting BPI's executive team, whose management has made it one of the strongest banks in the Portuguese market, and will work to generate the greatest possible value for all shareholders. CaixaBank's intention is that BPI should continue to be listed following completion of the takeover bid.

CaixaBank's business model and mutual cooperation will help BPI improve its profitability in the new market environment in Portugal. Following the bid, CaixaBank will analyse and propose potential areas for cooperation for the two entities, creating synergies, reducing costs and expanding revenue sources.

These new initiatives are expected to allow BPI to obtain synergies that will benefit all the institution's shareholders and reduce its ongoing cost to income ratio in the Portuguese market. Potential costs synergies are estimated at EUR 85 million from the third year and annual income synergies at EUR 35 million.

These synergies will allow BPI to accelerate the improvements in solvency and profitability recorded in the past year, from a fully loaded CET1 ratio of 8.6% in 2014 to 10% in 2015 and from a negative ROE of 7.3% in 2014 to 10.4% in 2015.

Positive impact for CaixaBank shareholders

CaixaBank expects this takeover bid to have a positive impact of around 8% on its recurring earnings per share from the first year. It expects a return on investment (ROIC) of 12% in the first year, rising to 14% in year three. Its impact on CaixaBank's capital base is estimated at 95-115 basis points, assuming a holding in BPI of 51-70% respectively post tender offer, which would reduce the fully loaded CET1 ratio to 10.6-10.4%, as the case may be. CaixaBank's objective is to maintain a fully loaded CET1 capital ratio in excess of 11% following this transaction, in line with the objectives in the 2015-2018 Strategic Plan.

Lower risk in Angola

The ECB has required BPI to reduce its concentration of risk in Angola, setting a deadline for this of 10 April this year. As it has proved impossible to reach an agreement, BPI has asked the ECB to extend the deadline for meeting the requirement. BPI owns 50.1% of Banco de Fomento Angola (BFA), the fourth largest bank in Angola by assets (EUR 8,022 million). The institution, which has been in Angola for 22 years, has 1.4 million customers, 191 branches and 2,610 employees, according to figures for December 2015. BFA contributed €136 million to BPI's profits last year.

Twenty years of collaboration

CaixaBank's investment in BPI began in 1995, with a long-term strategic vision and commitment to supporting BPI, with the objective of it becoming a leading bank in Portugal.

In 2012, CaixaBank obtained a CMVM waiver allowing it to exceed the threshold of one third of capital without launching a mandatory takeover bid, due to the restrictions on shareholder voting rights. This waiver was subject to a number of conditions, such as a commitment by CaixaBank not to designate any additional directors in addition to the four designated at that time. In February 2015, CaixaBank announced the launch of a voluntary takeover bid for the shares it did not control, it order to correct the imbalance between its holding in the company and its voting rights.

BPI is the fifth largest bank in Portugal with assets of EUR 40,700 million, of which EUR 33,300 million relate to its domestic activity. Net customer loans amount to EUR 24,282 million (EUR 22,800 million in Portugal), with a non-performing loan ratio of 4.6%, and customer funds of EUR 35,700 million (EUR 28,800 million in Portugal). In 2015 it made a net profit of EUR 236.4 million, following losses in 2014. Its fully loaded CET 1 ratio stood at 10% in December 2015.

It has 8,529 employees, of whom 5,899 are in domestic market, and 788 branches (597 in domestic market).