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Spain’s biggest savings bank, La Caixa, said Thursday it may list its retail banking activities on the stock market, the most dramatic step so far in a massive shake-up of the beleaguered sector.
The Barcelona-based bank, which traces its history back more than a century, said it was considering moving the entire banking side of its business into its listed investment arm, Criteria.
La Caixa, with 27,000 employees, 10.5 million clients and 5,300 branches, is the giant of Spain’s regional savings banks, many of them burdened with loans that turned sour when the housing bubble popped in 2008.
It would be a major event for the share market and a potent symbol of Madrid’s attempts to clean up the savings banks’ balance sheets by pushing them to boost core capital with private investments.
The boards of both La Caixa and Criteria were meeting Thursday to “analyse and if appropriate, approve a possible reorganisation of La Caixa,” the bank said in a statement.
The deal would transfer all of the banking business of La Caixa to Criteria, it said.
Criteria is among Spain’s most important institutional investors with stakes in energy giant Repsol, infrastructure company Abertis and top telecoms group Telefonica.
Criteria also would move some of its activities to La Caixa.
Shares in Criteria jumped 3.18 percent euros before trade was suspended ahead of the announcement.
Spain’s regional banks account for about half of all lending and are considered the Achilles heel of its financial system, many of them having loaned heavily during the property boom.
Prime Minister Jose Luis Rodriguez Zapatero’s government is racing to strengthen the regional banks to fend off market fears that Spain may eventually need an Irish-style financial rescue.
Those concerns have already pushed up the rates the state must pay to borrow from the debt markets.
Finance Minister Elena Salgado this week announced new, stricter rules on the level of rock-solid core capital — equity capital and retained earnings — that the banks will must have on their balance sheets.
All Spanish lenders will have to have a core capital level of 8.0 percent of total assets by September, even higher than the 7.0 percent required under tough new, international “Basel III” rules agreed last year.
The government will step in to take temporary stakes in those savings banks that do not meet the new requirements by then, she added.
La Caixa already exceeds those requirements.
As of September 30, its core capital was equal to 8.7 percent of total assets and the bank said its liquidity was among the highest of the Spanish financial system — at 22.1 billion euros ($30 billion), “practically all of it immediately accessible.”
La Caixa posted a net profit of 1.23 billion euros during the first nine months of 2010, a 12.9 percent drop over the same year-earlier period.
Spain’s banking sector has 180.8 billion euros in “problematic exposure” to the construction and real estate sectors out of a total loan portfolio of 439 billion euros, according to an analysis published last year by the Bank of Spain.