Two more Spanish savings banks agree to merge

2nd December 2009, Comments 0 comments

Unicaja and Cajasur of Andalusia are the latest two banks to merge in the midst of the nation’s worst recession.

Madrid – Two more regional Spanish savings banks, Unicaja and Cajasur, said on Tuesday they had agreed to merge as the pace of consolidation in the sector gathers pace due to a recession which has fuelled bad loans.

The two banks, based in the southwestern region of Andalusia, reached the deal late on Monday, they said in a statement sent to Spanish stock market regulator CNMV.

Unicaja and another savings bank based in Andalusia, Caja de Jaen, agreed in August to merge and by joining force the three banks will give rise to a powerful regional financial institution.

Last week two savings banks based in the northeastern region of Catalonia, Caixa Penedes and Caixa Laietana, announced that they had agreed to merge.

Spanish banks got off relatively lightly from the subprime mortgage crisis last year, as the country's strict rules meant they did not invest heavily in the high-risk loans that hurt financial institutions elsewhere.

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, both through loans to developers and mortgages.

In November, 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.

AFP / Expatica

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