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MADRID, Sept 9 (Reuters) - Spanish lender Banco Sabadell said on Monday it would carry out a capital hike ofbetween 1.3 billion euros ($1.72 billion) and 1.4 billion eurosto strengthen its balance sheet and meet increasingly rigorousregulatory demands.
The bank said it would carry out two consecutive capitalincreases. The first would attract new investors through anaccelerated bookbuild worth around 650 million euros, equivalentto 13.36 percent of Sabadell's capital.
Investment funds Colombia's Itos Holding and U.S.-basedFintech Investments had committed to subscribe to the firstincrease, Sabadell said, giving the bank the opportunity todiversify outside recession-hit Spain after a number of domesticacquisitions.
Sabadell will then offer current shareholders additionalstock in the bank.
Colombian financier Jaime Gilinski will become the biggestshareholder in Sabadell through Itos Holding following thecapital increase, a source close to the deal said.
According to a Reuters calculation based on the bank'sclosing share price of 1.80 euros ($2.39), Gilinski will end upwith around 5 percent of the company.
Spanish lenders were laid low by the country's property bustand took billions of euros of provisions last year to coverlosses on bad real estate deals to clean up their books.
Banks now face stricter regulation and higher capitalrequirements since Spain's financial sector was bailed out byinternational lenders last year.
HEADWINDS
"What Sabadell wants to achieve with this operation is tobolster its balance sheet to take advantage of the businessopportunities that present themselves as Spain's economyimproves," the lender said in a statement to the stock marketregulator.
Sabadell agreed in April to take over British bank Lloyds' retail and private banking businesses in Spain and tookfull control of insurer Mediterraneo Vida in May.
Consolidation is taking place across the sector as banksseek to shore up funds and weaker banks are snapped up bystronger rivals.
Sabadell also released a new report by consultancy OliverWyman on the bank's resistance to macroeconomic headwinds, whichestimated losses on its loan portfolio of between 11.6 billioneuros and 14.3 billion euros, depending on macroeconomicfactors.
The report, dated September 6 and for the period June 2013to December 2016, also projected that Sabadell would make lossesof between 7.4 billion euros and 8.7 billion euros on its assetportfolio.
Sabadell would have a capital buffer of between 5.8 billioneuros and 2.4 billion euros.
Sabadell said the capital increase would make it one ofEurope's best capitalised banks, with a capital ratio of 11percent.
Sabadell said Deutsche Bank and JP MorganSecurities would guarantee the capital increase.
The new shares in Sabadell will be listed on October 8.
