CatalunyaBanc is put up for auction

The bank created from Catalan savings bank CatalunyaCaixa is expected to be sold within the next two months. CatalunyaCaixa was intervened by the Bank of Spain last September 30th, as it could not reach the required core capital. The Spanish Fund for Orderly Bank Restructuring (FROB), owned by the Spanish State, currently owns 89.74% of CatalunyaBanc. The FROB has decided to disinvest in the Catalan bank, which starts a competition process that will sell 100% of CatalunyaBanc’s shares.


April 12, 2012 10:53 PM

Madrid (ACN).- The Spanish Fund for Orderly Bank Restructuring (FROB) has decided to put CatalunyaBanc up for auction. The private bank was created from Barcelona-based savings bank CatalunyaCaixa. The FROB will disinvest all its shares, which total 89.74% of the bank. This opens the sale of CatalunyaBanc, which from this Thursday will go through a competition process that will sell 100% of the Catalan bank’s shares. According to the FROB’s press release, the objective is to sell CatalunyaBank before next summer. The operation would be carried out using the same Asset Protection Scheme as with Unnim and CAM. This scheme guarantees that 80% of the losses for arrear payments within the next 10 years would be paid by the Fund for Deposit Guarantees (FGD), a fund managed by the Bank of Spain with money from the entire banking system. This means that the future owners of CatalunyaBanc would only have to pay for 20% of the losses, which is especially important taking into account the bank’s exposure to the real estate business. Currently the FROB owns 89.74% of CatalunyaBanc, and the rest is owned by CatalunyaCaixa itself. However, the FROB controls now the financial entity and can force to sell the 100% of the shares. The Catalan financial entity was intervened last September 30th by the Bank of Spain and rescued with public money because it could not meet the new core capital requirements. Neither the Bank of Spain nor the FROB have indicated which banks could present offers for CatalunyaBanc, but financial sources point out that at least 5 interested parties could participate in the first phase of the process, which is non-binding. These are Banco Popular, Banco Mare Nostrum, Santander, BBVA, and Banc Sabadell.

Financial sources have told ACN that the auction process is expected to be closed before the end of May, according to the deadlines from the Bank of Spain. The current management of CatalunyaBanc decided last March 30th to voluntarily ask for the auction process to start, and not wait until September’s legal deadline in order to find a financial investor that would buy part of the bank. That day they also presented the results for 2011. CatalunyaBanc’s banking business had a profit of €304 million but had a total loss of €1.335 billion because it allocated €1.505 billion in provisions for expected losses in its real estate business. It was the first time the bank registered losses. The Catalan bank has €77.075 billion in assets, 7,200 employees, and a network of 1,164 branches, mostly in Catalonia.

The current management of CatalunyaBanc has issued a press release in which they underline the financial entity’s “capacity to generate profits” with its banking business, generating a €304 million profit in 2011. They also added that CatalunyaBanc represents “an attractive” offer to any financial group interested in strengthening its presence within the Catalan market. The current management considers that with a new financial investor and “the guarantees of the Asset Protection Scheme” which separates the “deadweight of the real estate” assets, there are guarantees “to optimise” all its commercial activity and increase business.

CatalunyaBanc is the private bank created by the Barcelona-based savings bank CatalunyaCaixa. The transformation was part of the second wave of restructuring Spain’s financial system. Many savings banks transformed their business into a private bank in order to ease the process of finding financial investors in order to strengthen their capital and meet the new core capital requirements, which in Spain are stricter than those imposed in the Basel III agreement. CatalunyaCaixa resulted from the first wave of restructuring in 2010, being the merger of three traditional Catalan savings banks: Caixa Catalunya (created in 1926), Caixa Tarragona (created in 1949) and Caixa Manresa (created in 1865).