BBK says wins Bank of Spain auction for Cajasur

16th July 2010, Comments 0 comments

Regional Spanish savings bank BBK said Friday it had won an auction by the Bank of Spain to take over troubled peer Cajasur, which was acquired by the central bank two months ago.

BBK, which is based in the northeastern Basque region, said it would now take over the assets and liabilities of Cajasur, which chalked up losses of 596 million euros (765 million dollars) last year.

The Bank of Spain took control of Cajasur, based in the southwestern region of Andalucia and until then run by the Roman Catholic Chuch, on May 22 after it failed to complete a planned merger with another savings bank, Unicaja.

BBK's bid for Cajasur beat out offers from Unicaja and Cajasol, which like Cajasur are both based in Andalucia.

When the Bank of Spain took over Cajasur, it said the savings bank would need an injection of "at least" 523 million euros from its Fund for Orderly Bank Reconstruction (FROB).

The central bank set up FROB in June 2009 to facilitate mergers and encourage strong banks to help weaker rivals.

Spanish banks got off relatively lightly in the global credit crunch in 2008 as the country's strict rules meant they did not invest heavily in the high-risk US home loans that hurt financial institutions elsewhere.

But many regional savings banks have been exposed to bad debt since the collapse of the property sector at the end of 2008.

The central bank and the government have called for the consolidation of the sector in order to maintain liquidity.

Last month the central bank said the restructuring process underway involves 39 of the nation's 45 regional savings banks in 12 separate processes.

© 2010 AFP

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