Investment funds eyeing Spanish savings banks: report

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A dozen investment funds are interested in investing in Spain's troubled regional savings banks, which have until September to raise capital or face state intervention, a newspaper reported Wednesday.

Among the funds considering taking part in the recapitalisation of the unlisted savings banks known as cajas are Carval, Varde, Fortress, Cerberus, Apollo, Lone Star and Patron, business daily Expansion said citing sources close to the funds.

But to invest "they will demand entering into the board if they buy a stake in these banks or the sale of assets at a low price," it reported.

Spain is racing to strengthen its regional banks which were heavily exposed to the collapse of the housing market in 2008 to fend off market fears it 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 market.

Spanish Economy Minister Elena Salgado announced Monday that all Spanish lenders will have to have a core capital level of 8.0 percent by September, more than the 7.0 percent required under 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.

The amount needed to recapitalise the country's banking system will not exceed 20 billion euros (27 billion dollars) and "all or part" of that sum will come from financial markets, the minister said.

© 2011 AFP

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