The BBVA buys Unnim Banc and becomes Spain’s largest bank
The Bank of Spain has decided to allocate the Catalan Unnim Banc to the BBVA. With the operation, the BBVA will become Spain’s largest bank, ahead of Banco Santander when considering asset volume. The BBVA will pay €1 for Unnim and €300 million for 20% of the expected real estate losses. The remaining 80% and the public funds already allocated, which correspond to almost €2 billion, will be assumed by the Deposit Guarantee Fund, paid by all the banking sector combined with public funds. Unnim was intervened by the Bank of Spain in September, since it could not reach the required core capital and was too exposed to toxic assets. Unnim was the result of the merger of 3 Catalan savings banks from the 19th century: Caixa Sabadell, Caixa Terrassa, and Caixa Manlleu.
Barcelona (ACN).- The third wave to restructure Spain’s banking system started on Wednesday, after the first merger wave and that of transforming savings banks into private banks. The Catalan Unnim Banc has been bought by the giant BBVA, which becomes Spain’s largest bank, ahead of Banco Santander, considering their volume of assets in the country. Unnim has €28.54 billion of assets and €2.05 billion of its own resources. The Banco Bilbao Vizcaya Argentaria (BBVA) will pay a symbolic €1 price and will assume 20% of the real estate losses, calculated in €300 million. With this operation the BBVA reinforces its presence in Catalonia, an objective long sought by the bank. Unnim has more than 600 branches throughout Catalonia and 1.1 million clients. The Bank of Spain has decided to allocate Unnim to the BBVA, as Spain’s regulator has controlled the Catalan savings bank since its intervention in September. The savings bank Unnim was one of the financial entities that failed last summer’s stress tests. Considering the Catalan financial entity’s exposure to toxic assets and that it could not meet the new core capital requirements in due time, the Bank of Spain intervened in Unnim and forced its transformation into the private bank Unnim Banc. The Catalan savings bank had already received €953 million through two allocations from the public Fund for Orderly Bank Restructuring (FROB). Four banks presented offers to purchase Unnim: BBVA, Banco Santander, Ibercaja, and Banco Popular. Finally the Bank of Spain decided to hand Unnim Banc over to the BBVA, although in the last few days Ibercaja seemed better positioned. Unnim was created in 2010, resulting from the merger in 2010 of three Catalan savings banks from the 19th century: Caixa Sabadell, Caixa Terrassa, and Caixa Manlleu. On Wednesday evening it was unknown what would happen with the social work Unnim carries out.
The BBVA has bought Unnim Banc for €1, and it will pay €300 million, which corresponds to the 20% of money needed to balance Unnim’s real estate assets. Unnim’s real estate assets have lost part of their market value over the last number of years, generating a financial hole in the savings bank’s accounts. This has been quantified in €1.34 billion. The remaining 80% of Unnim’s real estate’s financial hole will be paid by the Deposit Guarantee Fund (FGD), which is mainly funded by all the banking companies in Spain but it also receives public funds. In fact, the FGD will also pay for the €953 million Unnim borrowed from the FROB. To sum up, Unnim's purchase by the BBVA will cost €300 million to the bank that will become Spain’s largest financial entity and €1.99 billion to the FGD, funded by all the banks and Spanish citizens.
A radical change in Catalonia’s banking sector
With Unnim’s disappearance, the Catalan banking sector loses part of its history and part of its assets, which will be managed by the BBVA. It also starts what is expected to be the last chapter of a profound restructuring of the sector. The first step was the mergers of savings banks, eliminating small and isolated financial entites. The second was the transformation of the savings banks into private banks and, for those that could not were intervened by the Bank of Spain. Finally, the last movement is another series of mergers, in line with the Spanish Government’s financial reform looking for strong and healthy private banks.
Two years ago, Catalonia had 10 savings banks, as well as one private bank, Banc Sabadell. Caixa Sabadell, Caixa Terrassa and Caixa Manlleu merged and formed Unnim, which disappears as it has been bought by the BBVA.
Caixa Catalunya, Caixa Tarragona and Caixa Manresa merged and formed CatalunyaCaixa, which is also controlled by the Bank of Spain since last September. The future of CatalunyaCaixa might be similar to that of Unnim Banc.
Two other savings banks, Caixa Penedès and Caixa Laietana, participated in broader projects, involving several savings banks throughout Spain. Caixa Penedès is now part of Banco Mare Nostrum and Caixa Laietana is part of Bankia.
Finally, the small Caixa Girona was bought by Europe’s largest savings bank ‘La Caixa’, based in Barcelona. ‘La Caixa, which has been the pillar of Catalonia’s banking system passed all its banking business to a new private bank 'CaixaBanc' last summer. ‘CaixaBanc’ is Spain’s third largest bank, after the BBVA and Banco Santander.