Spanish bank CAM likely has 12-bn-euro losses: executive
Failed Spanish savings bank Caja Mediterraneo likely has losses of about 12 billion euros ($16 billion), far more than first thought, the bank that bought it said on Wednesday.
Banco Sabadell, which took over the bank, known as CAM, as part of a financial sector clean-up prompted by the Bank of Spain, revised the losses up sharply from an earlier estimate of 5.5 billion euros.
Outright losses were likely to be closer to 17 billion euros than the earlier estimate of 5.5 billion euros, Sabadell executive director Jaime Guardiola told reporters.
But the mid-point between those figures "is about 12 billion euros, which could be closer to reality," he said. That represents half of the estimated 24 billion euros in doubtful loans made by the bank.
Either way the losses are huge, approaching the scale of the 17.55 billion euros that Spain has spent in two waves of restructuring of the industry since 2009.
Under the agreement to sell CAM to Banco Sabadell, Spain's bank rescue fund will provide some relief however, assuming 80 percent of CAM's losses over 10 years.
The central bank took charge of Caja Mediterraneo in July as part of Spain's efforts to clean up a financial sector still reeling from the bursting of a real estate bubble in 2008.
This month the central bank offloaded CAM, selling it to a public bank deposit guarantee fund which then sold it on to Catalonia-based Banco Sabadell for a symbolic one euro.
Other potential bidders for the ailing savings bank withdrew from the contest after studying CAM's books.
The CAM was one of five Spanish banks that failed European stress tests on July 15 to see if they could 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.
The subsequent economic downturn has worsened as the government has adopted tough austerity measures in an effort to stabilise the public finances.
© 2011 AFP