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Spain’s troubled Banco Popular announced that CEO Pedro Larena will step down on the same day as the bank announced that an internal audit found that it had insufficient provisions for bad loans. Shares fell more than 9 per cent on the day in Madrid.

Mr Larena’s resignation comes on the same day that the bank announced that an audit performed by PricewaterhouseCoopers had found insufficient loan provisions of over €600m. The insufficient provisions were related to troubled loans as well as credit given to clients to buy shares in the bank’s capital increase. The bank announced a €2.5bn rights issue last May.

The move comes amid a thorough makeover of management at the bank. Emilio Saracho, a former vice-chairman for JPMorgan in Europe, was named chairman in February, taking over from Angel Ron, whose team brought Mr Larena on board last July.

Mr Ron had led the bank since 2004 but had come under fire from investors and analysts after the bank shares lost 95 per cent in their value over the last five years. In February, shortly before Mr Saracho’s appointment, the bank unveiled an annual loss of €3.5bn for 2016.

In a statement to Spain’s stock market regulator, the bank said that Mr Larena had commicated to Mr Saracho his desire to leave his position “for strictly personal reasons” and that he would continue until the board named his replacement.

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