REPYY Repsol SA (QX)

   By Pietro Lombardi 
 

Shares in CaixaBank SA (CABK.MC) and Repsol SA (REP.MC) fall in Friday morning trading after the bank said it would sell its entire stake in the oil and gas company.

Caixa has a stake of about 9.4% in Repsol, worth roughly 2.5 billion euros ($2.93 billion)--according to Thursday's closing price. The Spanish bank said late Thursday it would sell its stake by the first quarter of next year.

At 0817 GMT shares in CaixaBank fell 1.9%, while Repsol lost 2.6%.

The disposal reduces balance sheet risk for Caixa, analysts with U.S. bank Jefferies said.

"We would expect the market to look through the headline EPS downgrade given the low multiple that should already be applied to such earnings stream," it said.

"On the other hand the removal of another balance sheet risk-factor and simplification of the investment case should justify a reduced cost of equity going forward," it adds.

The move comes at a time of higher oil prices and after Repsol's stock rose roughly 16% over the past six months.

The bank said it expects to report a charge related to the sale of about EUR450 million in the third quarter, while it doesn't foresee any significant impact on its fully-loaded CET1 ratio, a key measure of capital strength.

Caixa's Chairman Jordi Gual and Chief Executive Gonzalo Gortazar have stepped down from Repsol's board, the bank said.

The Repsol sale may "open the door to the sale of some or all" of Caixa's other holdings, analysts at Goldman Sachs say.

The Spanish bank still has holdings in other companies, including a 5% stake in Telefonica SA (TEF.MC) and a roughly 9.9% stake in Erste Group Bank AG (EBS.VI).

"We believe sell down of the investment stakes should be a positive catalyst," Jefferies said.

CaixaBank is 40%-owned by Criteria Caixa, a holding company managing the assets of "la Caixa" Banking Foundation, which also has stake in other companies, including Naturgy SA (NTGY.MC).

Write to Pietro Lombardi at pietro.lombardi@dowjones.com

(END) Dow Jones Newswires

September 21, 2018 04:34 ET (08:34 GMT)

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