Spain

A stand-off between Russian billionaire Mikhail Fridman and Ana Botin has ended with the Banco Santander SA chairman blinking first. Fridman’s hostile bid for struggling Spanish grocer Distribuidora Internacional de Alimentacion SA won shareholder approval earlier this month. But Santander, DIA’s second-biggest lender, objected to a related deal to recapitalize the company, a Bloomberg View reported. That refusenik stance threatened to trigger a default and wipe out Fridman’s equity within weeks of the takeover succeeding.

Struggling Spanish retailer DIA reached an eleventh-hour agreement to secure financing on Monday, new owner LetterOne said in a statement, staving off the imminent risk of having to start insolvency proceedings, Reuters reported. DIA’s failure to compete with domestic and foreign rivals that have invested more heavily in their stores has hit the company’s market share and left it with negative equity and towering debt.

Bonds held by the European Central Bank could become unlikely collateral damage in a battle between Spain’s largest bank and a Russian billionaire over an almost-insolvent retailer, Bloomberg News reported. The ECB is among bondholders that may be forced to take losses as a condition for Banco Santander SA to let Mikhail Fridman’s LetterOne investment fund recapitalize Distribudora Internacional de Alimentacion SA. The Bank of Spain bought DIA’s notes in 2016 as part of the ECB’s corporate bond purchase program.

Sales slid and losses continued at Spain’s DIA in the first three months of the year, the supermarket chain said on Tuesday, as investors awaited the next step in a takeover bid by Russian tycoon Mikhail Fridman’s investment fund, Reuters reported. Squeezed by tough competition from domestic and foreign rivals who have invested heavily in their stores, DIA has failed to stem a haemorrhage of market share it built up by discounting during a prolonged recession.

Banco Santander reported a 10.4 per cent drop in first-quarter net earnings, as restructuring costs in UK and Poland and high inflation in Argentina trimmed the bank’s performance, the Financial Times reported. The eurozone’s largest bank by market capitalisation said total net profit dropped to €1.84bn for the three months to March, down from €2.05bn in 2018. Analysts polled by Bloomberg had expected net earnings of €1.83bn for the quarter. Without foreign currency headwinds, the bank said profit for the quarter would have dropped 7.7 per cent.

Russian billionaire Mikhail Fridman’s holding company, LetterOne, has stepped up its criticism of a turnround plan at Spanish grocer Dia Group as it filed regulatory documents for its own bid to buy out and fix the troubled chain, the Financial Times reported. “A lot of Dia’s problems have been in the making for some time,” said Stephan DuCharme, managing partner of LetterOne division L1 Retail.

Banco Santander SA reminded investors that juicy bonds can come with nasty surprises. The Spanish lender rattled the bank Additional Tier 1 market by saying it will skip an option to call 1.5 billion euros ($1.7 billion) of perpetual contingent-convertible notes next month, sending the bonds tumbling, Bloomberg News reoprted. The announcement came late Tuesday, right at the deadline for a decision, after the bank kept investors in the dark for weeks regarding the call option and in the aftermath of another deal, a sale of dollar AT1 notes on Wednesday.

Russian billionaire Mikhail Fridman has offered to buy Dia Group in a deal that gives the struggling Spanish supermarket chain an equity value of €417m, a deep discount from its €2.7bn valuation at the end of 2017, the Financial Times reported. Mr Fridman’s holding company, LetterOne, which owns 29 per cent of Dia through its L1 Retail fund, has offered to purchase the rest of the company for €0.67 a share, a premium of 56 per cent to Monday’s closing price. LetterOne bought much of its existing stake early last year, when shares were trading at about €4.

Should a country embrace buyout groups with a growing appetite for its assets or repel them as rapacious capitalism on fears of job cuts and short financial gains? That’s the question facing Spain — which for the greater part of the past decade has suffered a steep economic crisis — as it finds itself luring a growing number of buyout funds looking to snap up assets, according to DD’s Javier Espinoza, the Financial Times reported.

Banco Santander said it will no longer hire Andrea Orcel, the outgoing boss of UBS’s investment bank, as its chief executive in a big U-turn just four months after Spain’s largest lender announced his appointment. Santander said the reversal was triggered by the amount that the bank would have had to pay Mr Orcel to compensate him for deferred stock awards that he earned during his seven-year career at UBS, the Financial Times reported.