Banc Sabadell buys Caja de Ahorros del Mediterraneo (CAM) for just €1 after a successful regularisation process
With this operation, the Catalan Banc Sabadell becomes Spain’s fifth largest banking group. The Bank of Spain has decided to accept Banc Sabadell’s offer to purchase the CAM, a savings bank that was rescued and restructured. Banc Sabadell buys CAM after the savings bank completed a €5.25 billion regularisation process to balance its books. Banc Sabadell will take on 20% of the expected losses over the next ten years from CAM’s real estate properties.
Madrid (ACN).- The Bank of Spain has announced this Wednesday it accepts Banc Sabadell’s offer for the Caja de Ahorros del Mediterraneo (CAM). The Catalan bank buys CAM for just €1 after a successful regularisation process, which cost €5.25 billion. The bailout had been paid for by Spain’s private banking sector, through their solidarity fund called the ‘Deposit Guarantee Fund’ (FGD). The Catalan owned Banc Sabadell will purchase a completely regularised savings bank for the symbolic amount of €1. CAM has a large real estate portfolio, which experts foresee could lead to losses of up to €20 billion over the next ten years. Banc Sabadell accepted the offer to purchase CAM with an important condition; to only assume 20% of the losses linked to CAM’s real estate properties, which represents a maximum of €4 billion. The remaining 80% will be paid by the FGD, without public money. This operation means the Catalan bank becomes Spain’s fifth banking group, and consolidates its market position along Spain’s Mediterranean coast.
After a bailout of €5.249 billion paid by the Spanish private banking sector’s solidarity fund, the Caja de Ahorros del Mediterraneo (CAM), based in Alacant (Alicante), is a completely regularised the bank. Since then the Bank of Spain has decided to allocate the savings bank to Banc Sabadell. Seven financial entities had presented offers for the Alacant-based savings bank, after the Bank of Spain rescued it on July 22nd. However, only Banc Sabadell persisted until the end of the process. For the Catalan company, purchasing a regularised CAM for only €1 euro makes “strategic sense”. Their aim is to expand their presence in the Valencian Community, Murcia and the Balearic Islands, where CAM has most of its branches and clients. With this move, Banc Sabadell will consolidate its position along Spain’s Mediterranean coast. According to Banc Sabadell, after the purchase of CAM, the Catalan banking group will become the fifth financial entity in Spain, with more than 5 million clients. In addition, the group’s total assets will increase by 75%. Over the past few years Banc Sabadell has purchased NatWest, Banco Herrero, Banco Urquijo, Banco Guipuzcoano, and also Banco Atlántico.
Through a press release on Wednesday, Banc Sabadell said that the acquisition “will not have an effect on the quality of its balance sheet”. The Catalan company added that the operation comes after the complete regularisation of the saving’s bank. In addition, CAM now has additional cash guarantees that will permit it to function normally in the coming years. During the process of purchasing CAM, Deutsche Bank, Nomura International and Roca i Junyent law firm have advised Banc Sabadell.