catalunyacaixa

The Catalan savings bank, which the Bank of Spain intervened in last September, is selling part of its real estate stock. During the first seven months of 2012, the bank has commercialised 6,700 housing units, 40% more than last year’s same period. Around 90% were sold and the rest were rented. 56% were newly built houses and 44% were second hand properties. Regarding the location, 54% were in Catalonia, 12% in Valencia, 12% in Andalusia and 8% in Madrid.

Independent auditors state that in the worst possible scenario the Spanish banking system would need up to €62 billion. The Eurozone agreed to put at Spain’s disposal up to €100 billion if needed. In the most likely scenario, the Spanish banking system would require between €16 billion and €25.6 billion. Within the most stressed case, Spain’s three main banks would have enough resources of their own to face difficulties and would not need any additional funding. They are the Barcelona-based CaixaBank and the two international giants BBVA and Banco Santander.

According to the Bank of Spain’s Deputy Governor, the Catalan bank would need an additional amount of €4.5 billion to meet the capital requirements of the last decree approved by the Spanish Government. Before this announcement, the Spanish State had already allocated €2.97 billion to rescue CatalunyaCaixa. Novagalicia would also need €4.5 billion. Combined, these €9 billion are to be added to the €19 billion for Bankia. The Spanish Government refuses to give the total figure required by the entire banking system, as it waits for the independent audit’s results. However, the IMF leaked that Spanish banks might need €40 billion.

The work of ceramist Josep Llorens Artigas is displayed in many museums around the world, such as New York’s Metropolitan. Now, a retrospective exhibition of Artigas is on show until September 2nd in La Pedrera, one of Gaudí's most emblematic buildings in Barcelona. The exhibition has over 150 works by the Catalan artist. This display is titled 'L'home del Foc' (The Fire Man).

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.

The Spanish Minister for the Economy, Luís de Guindos, wants to speed up the process and have the entire Spanish banking system restructured before the summer. The Spanish Minister also said that he is expecting further concentration processes of other financial entities to be announced in the coming weeks. CatalunyaCaixa’s banking business had a profit of €304 million, although the €1.5 billion provisions for the real estate business caused a €1.34 billion loss in 2011.

The Catalan Government has been issuing retail bonds over the last two years as a regular way of financing its liquidity. All the previous issues have been a success, with high demand. Between April 2nd and April 24th Catalan citizens will be able to buy one year and two year treasury bonds of the Catalan Government’s debt, with an interest rate of 4.5% and 5% respectively.

After not having found the needed private investors to meet the required levels of core capital, the Bank of Spain’s Governor announced that the Spanish State would intervene in four savings banks, including two from Catalonia. The State will control 100% of Unnim and 90% of CatalunyaCaixa. Once the banks are streamlined, private investors will be offered shares. The European Commission has authorised the operation. Now, all Spain’s banks and savings banks have at least 8% core capital. Considering the global banking sector restructuring in Spain, the Spanish State has spent 19,000 million euros from the public finances.

Unnim and CatalunyaCaixa would have 4.5% and 4.8% of core capital respectively. However, the provisions that all Spanish banks must have to face difficult times have not been taken into account as they did not exist in other European banking systems. With these funds taken into account, Unnim and CatalunyaCaixa would have approved the tests with 6.2% and 6.3% respectively. CaixaBank, the most important Catalan bank passes the test with 6.4%.

A new study by the Catalan savings bank corrects and improves the previous economic forecast. It is now believed that in 2011, Catalonia will grow at a 1.1% annual rate, and at 1.6% in 2012. However, without the public sector budget cuts, the Catalan economy will grow at 2% this 2011. The export sector has reached historical maximums, and will lead economic growth. However, economic growth in 2011 will not be translated into an improvement in employment.

A Barcelona-based newspaper announced in its Tuesday edition that the two Catalan savings banks would see a state intervention and would be nationalised by the Spanish Government and the Bank of Spain this summer. CatalunyaCaixa has denied the claims. Unnim also denied the rumours and reminded the press of the 30th September deadline set by the Bank of Spain to restructure its business and find additional capital.

The board of the Catalan savings bank decided to “temporarily” use public capital in order to meet the new requirements in the sector. This move means it will reach 10.4% of ‘core capital’. Private capital is expected to increase its share “in the medium-term”.

However, the Catalan bank does not close the door to integrating a financial entity in the future. Banc Sabadell wants to take advantatge of the restructuring process of the financial system to grow throughout Spain, told its President Josep Oliu.

CatalunyaCaixa won 109.1 million euros in 2010, 1.1% less than in 2009. The second Catalan savings bank is the result from the merger of Caixa Catalunya, Caixa Tarragona and Caixa Manresa. The resulting savings bank currently has 6.9% of core capital, far from the needed 10% by next September. The savings bank already announced its plans to become a regular bank.

All the Catalan savings banks are in the process of becoming regular banks. In the last 6 days, all the savings banks have been defining their future and they are all going in the same direction: transforming their structures into those of a regular bank. The first stage was the merging process that took place before summertime and now, with the new banking rules at international, European and Spanish level, savings banks are finding it easier to continue operating as regular banks. The old model is thus finished.