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The story
History
Banco Español de Crédito is rooted in a French-owned banking company which, promoted by Isaac Pereire, was established in Madrid on 28 January 1856, under the new Credit Companies Law, bearing the name of Sociedad de Crédito Mobiliario Español. The company was primarily dedicated to covering the budget deficit of the Government of Spain, through acquisitions of public debt, and the granting of financial credits to public companies.
After the Spanish–American War, the financial reforms of Raimundo Fernández Villaverde of 1900 and with the repatriation of the capitals of the former American colonies, the shareholders decide to liquidate the company and establish a new one, the Credit Bank of Spain, on 1 May 1902, with a capital stock of 20 million pesetas represented by 80,000 shares with a nominal value of 250 pesetas. The bank's promoter was a French group chaired by Gustavo Pereire, administrator of the Company of the Iron Roads of Northern Spain. This initiative was joined by Cayetano Sánchez Bustillo and León Cocagne (deputy director of Banco Hipotecario de España) on behalf of a group of Spanish investors. The first headquarters, the Building of the Furniture Credit Society, was located in Paseo de Recoletos, Madrid.
From 1940, Banesto began an expansion and absorption process of other entities that placed it amongst the most prominent Spanish banks. In 1955, Banesto acquired Banco de Vitoria, which it maintained as a subsidiary until its full integration in 2003, and in 1978 it acquired Banco Coca, then chaired by Ignacio Coca.
Banesto acquired Banco del Pacífico in 1991 and integrated it. In 1993 it bought Banco de Concepción, but the merger was suspended when the Bank of Spain intervened in Banesto. When Banco Santander acquired Banesto in 1994, they sold Banesto Uruguay, Chile, and Banco Shaw in Argentina. Banesto Chile was sold to Banco Hipotecario de Fomento de Chile (BHIF). In 1998 BBVA bought BHIF.
Ana Patricia Botín, daughter of Santander president Emilio Botín, served as executive chair of the bank between 2002 and November 2010, when she moved to the position of CEO of Santander UK.
The Santander Group announced in December 2012, that it would purchase the remaining 10% of Banesto that it does not currently own, and will merge the business with the existing Banco Santander business in Spain.
1993 crisis and intervention
In December 1993, the Spanish National Stock Exchange Commission (Comisión Nacional del Mercado de Valores) suspended trading shares in Banesto following a fall in value estimated between 6.56% and 6.8% from 2,135 to 1,995 Spanish pesetas and sharp increases in loan delinquencies observed by the Spanish government in the previous quarter, Quarter three of 1993.
Alfredo Pastor, then-Secretary of The State for the Economy stated that inspectors from the Bank of Spain had concluded that Banesto lacked resources to cover liabilities and that the management of the bank wasn't able to secure the necessary financing to remedy the situation. In addition to its suspension, the Spanish government removed its chairman Mario Conde, replacing him with a board containing representatives of five other private banks: BBV, (now BBVA), BCH (now Santander), Argentaria (now a part of BBVA), Santander and Popular (now Santander)
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According to The New York Times, the bank was also forced to admit it was directing profits and revenue from some sales of assets into reserves for losses from loans. The Spanish newspaper El País dubbed the shortfall in financial resources a "hole", which has had varying estimates. The British newspaper The Independent cited the shortfall as 605 billion Pesetas equating to $7.1 billion as of January 2019 (£5.6bn).
From Wikipedia’s article on Banco Español de Crédito, shared under CC BY-SA 4.0.4