Two Spanish savings banks reach draft merger accord

3rd March 2009, Comments 0 comments

The merger of two regional banks, Unicaja and CCM, will make it one of the five largest savings banks in the country.

MADRID – Two regional Spanish savings banks, Unicaja and CCM, said Monday they had reached a tentative agreement to merge, the first such move in Spain since the global financial crisis erupted last year.

"The project to integrate the two entities has the support of financial authorities and it will give birth to a financial institution of greater solvency and economic strength," the two banks said in a joint statement.

The new combined bank would have assets of around EUR 60 billion and 1,500 offices across Spain, making it one of five largest savings banks in the country, the statement added.

Regional Spanish savings banks like CCM and Unicaja are largely oriented towards commercial banking and they have been especially hard-hit by the financial crisis, which has led to a rise in their bad loan ratios and a sharp decline in the value of their assets.

Unicaja, based in the southern port city of Malaga, posted a net profit of EUR 286.1 million in 2008, a 20 percent drop over the previous year, while its non-performing loan ratio rose to 2.18 percent from 0.62 percent in 2007.

CCM, based in Cuenca, is struggling with an event greater non-performing loan ratio. It rose above 4.5 percent as of the end of September.

Formerly one of the eurozone's chief engines of economic growth and job creation, Spain suffered an abrupt change of fortunes last year when the global financial crisis hastened a correction that was already underway in its key real estate sector, once the engine its decade-long economic boom.

The slump, which reflects a downturn elsewhere in the European Union, has hit savings banks hard because of their close links to the building sector.

AFP / Expatica

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