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Spain's Popular was on verge of failure before takeover deal: ECB

Banco Santander stepped in to take over stricken rival Banco Popular Espanol in a deal brokered by regulators that imposes billions of losses on investors.

Santander will raise about 7 billion euros ($7.9 billion) in a rights offer to bolster Popular's balance sheet, acquiring the lender for 1 euro, according to a regulatory filing on Wednesday. Stock and bondholders in Popular will foot losses of about 3.3 billion euros after regulators — saying that the bank was failing — sought a rescue that would avoid taxpayer funding.

The forced sale is the first major action by the Brussels-based Single Resolution Board, set up in January 2015 to deal with euro-area bank failures and wind them down with minimal impact on taxpayers and financial stability. Popular's situation had become more urgent in recent weeks. New Chairman Emilio Saracho struggled to find a buyer, plans for a possible share sale were complicated by a stock slump and the bank's liquidity situation worsened.