Catalunya Banc’s selling proceedings re-start

Madrid (ACN).- The Spanish Fund for Orderly Bank Restructuring (FROB) announced on Friday that it will re-start the auction proceedings to sell Catalunya Banc and Banc de València. The selling process for these two banks was temporarily frozen on the 21^st of June, waiting for a calmer financial environment. The FROB – which is run by the Bank of Spain and the Spanish Government – decided to put the auction on hold, in order to wait for the results of the two independent audits on Spain’s banking system made by Oliver Wyman and Roland Berger. In June, Catalunya Banc’s auction was only pending the final offers by six financial entities to be completed. In September 2011, the FROB took control of Catalunya Banc and de facto the Catalan bank was nationalised. The FROB’s plan, as described by the Spanish Minister for the Economy, Luís de Guindos, was to restructure the Catalunya Banc’s business, guarantee its viability and sell it to the private sector again. There was some surprise in the sector over today’s announcement by the FROB, as experts believed that the FROB would wait until the 28^th of November at least. On this day the European Commission, on the bases of the independent audits, will confirm the capital needs of Catalunya Banc, Banc de València, Bankia and Nova Caixa Galicia, the four banks nationalised by Spain.

Catalunya Banc is the private bank formed following CatalunyaCaixa’s second restructuring process, which was the result of a previous restructuring operation. In the first wave of changes in the Spanish banking sector due to the financial crisis, three historical Catalan savings banks (Caixa Catalunya, Caixa Tarragona and Caixa Manresa) merged in mid-2010 and formed CatalunyaCaixa. In September 2011, Catalunya Banc was nationalised by the FROB as it could not provide the minimum core capital requirements.

The FROB has now reopened the selling file for Catalunya Banc and Banc de València. In June, six financial entities were about to present their final offers for Catalunya Banc. They were: BBVA, Santander, Banc Sabadell, Banco Popular, Kutxa and the US investment fund JC Flowers. All six had made a thorough examination of the Catalunya Banc accounts and they had passed the due diligence phase, which means that they had total knowledge of the company’s accounts under a confidentiality clause.

The FROB justifies the re-taking of the auction because the studies on the capital needs of the Spanish banking sector have been completed. In addition, it has waited for the approval of two new sets of rules for the Spanish banking sector, in relation to international recommendations.

According to the experts consulted, the FROB will now probably ask the six financial entities if they are still interested in purchasing Catalunya Banc. If affirmative, it will ask them to provide their final offer within a public auction process.