Two Spanish savings banks agree to merger

26th November 2009, Comments 0 comments

The tie-up of the two Catalan institutions, Caixa Penedes and Caixa Laietana, will create the country’s ninth-largest savings banks by assets.

Madrid – Two Spanish savings banks, Caixa Penedes and Caixa Laietana, said Wednesday they had agreed to merge, creating the country's ninth-largest savings bank by assets.

The tie-up of the two Catalan institutions will create a savings bank with over EUR 32 billion in assets, over 900 offices and a staff of around 4,000, the two said in a statement.

Last week, Bank of Spain governor Miguel Fernandez Ordonez said he would like to see a third of the country's 45 savings banks quickly absorbed by stronger institutions.

He suggested the radical reform in a bid to help the sector which is struggling in the midst of the nation's worst recession in decades.

"I think there are at least 15 institutions that should merge with others. I hope (by) next spring we have restructured all these institutions, that’s my idea. We now have many, many mergers that we are discussing," he told the Financial Times newspaper.

Spanish commercial banks got off relatively lightly from the subprime mortgage crisis in 2008, as the country's strict rules meant they did not invest heavily in the high-risk loans that caused the economic chaos.

But many, especially smaller unlisted saving banks usually controlled by regional politicians, were badly hit by the collapse of the country's once-booming property market.

Unlike in several other European nations, no bank in Spain has been formally nationalised as a result of the global credit crisis, but in March Madrid placed the regional Caja de Ahorros Castilla La Mancha under special administration.

And in June, Spain announced a multi-billion-euro fund to help revive the financial sector by buying stakes in banks hit by the global crisis to get them lending again.

Fernandez Ordonez told the Financial Times he wants to use this Fund for Ordered Bank Restructuring to achieve his aim of multiple mergers.

AFP / Expatica

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