Spain's CaixaBank gains control of Portuguese rival BPI

Spain's third-biggest lender CaixaBank has gained control of 84.5 percent of its Portuguese rival BPI, stock market regulator CMVN said Wednesday, putting an end to a two-year long battle for control of the bank.

Barcelona-based CaixaBank will pay 644.5 million euros ($689.6 million) to raise its stake in Portugal's second-largest listed lender from 45.5 percent as part of its takeover bid, the regulator said in a statement.

CaixaBank in September announced its latest bid for the 54.50 percent of the Portuguese lender that it did not already own, offering 1.134 euros per share.

The deadline for acceptances of the offer was the close of business in Lisbon on Tuesday.

CaixaBank has had BPI in its sights since February 2015.

But it was slowed by a dispute over voting rights with Isabel dos Santos, the billionaire daughter of Angola's longtime president, who is the Portuguese lender's second biggest shareholder with an 18.6-percent stake.

She has been able to resist CaixaBank's previous takeover attempts because of a 20-percent limit on any single shareholder's voting rights.

But BPI shareholders voted in September 2016 to scrap the cap on voting rights and Dos Santos this time around reportedly accepted CaixaBank's offer.

BPI agreed to sell a two-percent stake in its Angolan operation called BFA to a telecoms firm Dos Santos controls in exchange for her support in the shareholder vote to remove the voting rights limits.

The deal slashed BPI's stake in BFA to less than 50 percent, helping it to comply with European Union rules requiring it to reduce its exposure to risky assets in Angola, an oil and diamond rich former Portuguese colony.

CaixaBank, which first invested in BPI in 1995, had initially tried to buy BPI in February 2015, but it withdrew its offer after Dos Santos refused the lifting of the cap on shareholder voting rights.

- Fragile banking system -

The Spanish bank said it will have a combined market share in Spain and Portugal of 14 percent in credit, and 13 percent in deposits, following the takeover.

"Portugal is unquestionably a country with a great future, and one where we want to be an active player," said CaixaBank CEO Gonzalo Gortazar.

Portugal returned to growth in 2014, the year it exited a punishing three-year 78-billion-euro EU/IMF bailout deal that imposed tough austerity measures, with a modest expansion of 0.9 percent and growth has remained sluggish.

The OECD predicted Monday that the Portuguese economy would expand by 1.2 percent this year and by 1.3 percent in 2018.

BPI's takeover is the latest step forward for Portugal's fragile banking system, after Brussels in August 2016 approved a recapitalisation plan for ailing state-owned lender Caixa Geral de Depositos, the country's largest bank.

The total capital could run to over five billion euros, including 2.7 billion injected directly by the state.

Meanwhile BCP, Portugal's largest listed bank, said Tuesday that China's largest private conglomerate Fosun has raised its stake in the lender to 23.9 percent from 16.7 percent.

Portugal is still trying to sell Novo Banco ?- the "good bank" rescued from the wreckage of Banco Espirito Santo (BES) -- after an earlier auction failed in 2015.

CaixaBank said it would now put in place a cost synergies plan worth around 120 million euros. The plan will involve layoffs of 900 employees.

The Spanish bank also said it would name a new CEO at BPI. Pablo Forero, a CaixaBank executive since 2009, will replace Fernando Ulrich who will become the bank's chairman.

BPI, which had 38 billion euros in assets as of the end of December, posted a net profit of 313.2 million euros last year, a 32.5 percent increase over 2015.