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Banc Sabadell will buy Banco Gallego for 1 euro after a €245 million injection of public money

On Wednesday it became known that the Catalan Banc Sabadell would acquire Banco Gallego from the Spanish Fund for Orderly Banking Restructuring (FROB). However, the details of the operation were still being discussed and no detailed information was disclosed. On Friday, it was stated that the FROB – owned by the Spanish Government and the Bank of Spain – will inject €245 million of public money into Banco Gallego. In exchange, Banc Sabadell will buy the financial entity for the symbolical price of 1 euro but will take care of all the potential future losses.

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20 April 2013 12:52 AM

by

ACN

Barcelona (ACN).- On Wednesday it became known that the Catalan Banc Sabadell was going to acquire Banco Gallego from the Spanish Fund for Orderly Banking Restructuring (FROB). However, the details of the operation were still being discussed and no detailed information was disclosed. On Friday, it was stated that the FROB \u2013 owned by the Spanish Government and the Bank of Spain \u2013 will inject \u20AC245 million of public money to the Banco Gallego via a capital enlargement. In exchange, Banc Sabadell will buy all the financial entity\u2019s shares for the symbolical total price of 1 euro but the Catalan bank will take care of all the potential future losses. Banc Sabadell performed a similar operation in December 2011, when it bought the Caja de Ahorros del Mediterraneo (CAM), also for 1 euro. With this operation, the re-capitalisation process of the Galician entity will be completed.


The selling contract of Banco Gallego does not include an asset protection scheme to cover the hypothetical deterioration of the financial entity\u2019s loan portfolios. Therefore, the contract\u2019s efficiency depends on obtaining the green light from the administrative authorities at Spanish level and from the European Commission. Financial sources expect these authorisations to be given without too many problems. Banco Gallego was partially owned by Novagalicia Banco. The plan to restructure Novagalicia Banco, approved by the Bank of Spain on the 27th November 2012 and by the European Commission on the day after, already included selling their shares of Banco Gallego to a third bank after having been nationalised by the FROB.

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  • Banc Sabadell's offices in Barcelona (by M. Amengual)

  • Banc Sabadell's offices in Barcelona (by M. Amengual)