ML-Implode News - Shock Waves Spread from Spain's New Banking Crisis

``Popular may not be a systemically important institution, but it's nonetheless an institution of great import. It has the largest portfolio of small business customers in Spain and enjoys the patronage of one of Spain's most influential institutions, Opus Dei. Its well-heeled members are among the bank's most important shareholders and investors, and they stand to lose a lot of money if a last-minute buyer is not found soon.
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And it's not just Opus Dei, or Popular's thousands of long-suffering retail investors, that could end up paying a heavy price. Popular's investors also include PIMCO, one of the world's largest asset managers, which owned â‚¬279 million of Popular's outstanding â‚¬1.25 billion of face value in AT1 bonds at the end of March, making it by far the largest holder at the time.
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So far, despite their high-risk nature, no AT1 [contingent-convertible] bond has ever been bailed in. But Popular, as a mid-sized bank that has arguably exhausted all its possibilities of resurrection, is in a terribly weak position.

"It would be the first triggering of an AT1," Lloyd Harris, an analyst at Old Mutual, told the FT. "These types of events are more likely for Popular than they ever were for Deutsche Bank," he added, referring to Deutsche Bank's Co-Cos that got trampled last year.

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Shock Waves Spread from Spain's New Banking Crisis