Banco Santander Buys Banco Popular for a Buck

Spain's Banco Santander (SAN) - Get Report acquired struggling Spanish lender Banco Popular (BPESY)  for €1.

The European Central Bank said Wednesday it adopted a so-called "resolution decision" on Banco Popular and ordered the transfer of all of its shares and capital to Banco Santander.

"Due to its recent stressed liquidity situation, the ECB had decided that Banco Popular was "failing or likely to fail," the ECB said in a statement.

The combination of the two lenders will create the biggest bank in Spain and Portugal, with about 21 million combined customers.

Santander said it would raise around €7 billion ($7.88 billion) in new capital as part of the rescue process "which will cover the capital and the provisions required to reinforce the balance sheet of Banco Popular."

Banco Popular shares have fallen 63% over the past month amid concerns the lender, which has been struggling under the weight of billions of euros in non-performing loans, would need to raise capital or seek a government rescue.

This article was written by a staff member of TheStreet.