Spain’s CaixaBank climbs on stock exchange debut

Spanish savings giant La Caixa’s newly created retail banking arm, CaixaBank, listed on Friday and got a double-dose of good news: a share price boost and a rating upgrade.

Shares rose 1.18 percent to 4.870 euros by late morning after they began trading for the first time on the Madrid Stock Exchange.

Moody’s Investors Service greeted the listing by upgrading CaixaBank’s long-term rating by three points to Aa2, meaning its debt is high quality with “very low” credit risk, from A2.

The rating outlook was negative, in line with Moody’s concerns over Spain’s financial system.

La Caixa, the largest savings bank operation in Spain with more than 28,000 employees and 5,300 branches, ploughed its entire retail banking operation into CaixaBank.

The La Caixa group gave its new bank a head start by siphoning off its doubtful property loans into a separate real estate branch, Servihabitat, and by assuming 8.2 billion euros ($11.9 billion) in net debt.

In a complex listing, La Caixa transferred its retail banking assets via an affiliate into its already-listed investment banking firm, Criteria. Criteria was then transformed into CaixaBank.

“The stronger credit profile of CaixaBank versus former La Caixa is further reinforced by the fact that La Caixa will not transfer to CaixaBank its portfolio of real estate assets,” Moody’s said.

“Moreover, moving to a commercial bank status allows CaixaBank to access equity capital markets and to be subject to market discipline,” the New York-based agency said.

Moody’s assigned CaixaBank a bank financial strength rating of B-minus indicating a “solid” liquidity position.

Spain’s regional savings banks are considered the weak link in the country’s financial system as they struggle under the weight of loans that turned sour because of the 2008 property bubble collapse.

Under new regulations requiring more robust balance sheets, the banks must raise the proportion of core capital they hold to 8.0 percent of total assets from 6.0 percent — or 10.0 percent if they are unlisted.

CaixaBank boasts a core capital ratio of 11 percent.