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

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 – owned by the Spanish Government and the Bank of Spain – will inject €245 million of public money to the Banco Gallego via a capital enlargement. In exchange, Banc Sabadell will buy all the financial entity’s 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’s loan portfolios. Therefore, the contract’s 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 27^th 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.