Bank of Spain offloads CAM to Banco Sabadell
The Bank of Spain said Wednesday it will offload struggling savings bank Caja Mediterraneo (CAM) to Banco Sabadell, the only bank which has made an offer to buy the loss-making lender from the state.
Spain's bank deposit guarantee fund -- set up to protect personal deposits in the event of a bank failure -- will acquire CAM for 5.249 billion euros ($7.025 billion) before selling it to Banco Sabadell for one euro, the central bank said in a statement.
Other potential bidders for the ailing savings bank -- including Santander, BBVA, CaixaBank, Ibercaja, Barclays and private equity group JC Flowers -- withdrew from the contest after studying the state of CAM's books.
Under the agreement to sell CAM to Banco Sabadell, Spain's bank rescue fund will assume 80 percent of CAM's losses over a ten year period.
The Bank of Spain announced on July 22 that it would take control of CAM through an injection of 2.8 billion euros and the opening of a 3.0 billion euro line of credit.
The CAM was one of five Spanish banks that failed new European stress tests on July 15 to see if they can survive a major crisis.
It is based in the eastern coastal region of Alicante which was one of the worst hit by the bursting of the property bubble.
© 2011 AFP