Catalan savings bank 'La Caixa' to create new listed bank 'CaixaBank'

'La Caixa' will get share listing by transforming its industrial holding company 'Criteria' into a bank. The new financial institution will become one of the top 10 banks in the Eurozone


January 28, 2011 10:05 PM

Barcelona (ACN).- Catalonia's savings bank 'La Caixa' has set out plans to become a listed bank. The Catalan savings bank will transform its current listed industrial holding company, 'Criteria', into a bank, 'CaixaBank'. 'La Caixa' will have 81,1% of the shares of the new bank, which will have a core capital adequacy ratio of 10.9 % of assets. The process to create 'CaixaBank' will be completed by August.

By announcing its plans to create a bank, 'La Caixa' has taken a major step forward in the process of reform of the savings bank sector in the country. The Spanish government is pressing saving banks to reform themselves, in an attempt to avoid speculation about a potential EU bailout for Spain.

The Spanish Economics minister, Elena Salgado, said all saving banks would need a minimum core capital ratio of 9% or 10% if they do not have private investors. The ratio is of 8% for the rest of the banks, which are listed. With the creation of 'CaixaBank', the Catalan 'La Caixa' will meet the requirements of the Spanish government.

'La Caixa' has been usually seen as having a strong position in the Spanish banking system. Its decision to get share listing and become a bank is expected to lead the way for similar movements in smaller –and more problematic- savings banks.

In fact, 'La Caixa' is the biggest savings bank in Spain and in all of Europe, and it is also considered the third strongest financial institution in the state. When becoming 'CaixaBank', the institution will be rated as one of the top 10 in the Eurozone, a group where one can also find Spanish banks Santander and BBVA, as well as French BNP Paribas or German Deutschland Bank.

After the sale of 1.5 billion euros of convertible bonds, 'CaixaBank' will have a core capital adequacy ratio of 10.9 percent of assets and will also have a liquidity of 20,000 millions, according to the company. The new bank will be owned in a 81,1% by 'La Caixa'. The rest of the assets will be for the share-holders of 'Criteria'. On Friday, 'Criteria' surged by a 16% in the Spanish markets, and 'La Caixa' decided to suspend trading temporarily until the final situation of the institution is clear.

'La Caixa' Chairman, Isidre Fainé, said the changes to the institution, created 100 years ago, are 'historical'. Fainé said the creation of 'Criteria' and its share listing, back in 2007, was a 'first step' for this 'reorganisation'. He argued that 'La Caixa' having its own listed banks was the 'best solution to adapt to the new challenges of the international financial environment'. Similarly, 'La Caixa' CEO, Joan Maria Nin, said the plan is a great opportunity for this financial institution, which will keep its 'social activities' and its participation in companies such as Agbar, Repsol or Telefónica.