CatalunyaCaixa and Unnim deny nationalisation rumours

Barcelona (ACN).- The Spanish savings bank landscape is still in a transition process. Most of the mergers are finished and most of the resulting financial institutions have announced their transformation into private banks. For most of them, this is currently an ongoing process, with different problems, both in size and importance. In fact, not all banks and savings banks in Spain were in the same situation when the crisis started, and therefore some have more room than others to undergo their adjustments. Some of them are in a strong and healthy financial situation, such as Santander, BBVA or La Caixa. But others are experiencing difficulties. Despite the mergers they are in a weaker position, with low levels of core capital, such as Unnim, CatalunyaCaixa or the Caja de Ahorros del Mediterráneo (CAM). The Spanish Government and the Bank of Spain created the Fund for Orderly Bank Restructuring (FROB), to which savings banks could ask for capital. The FROB was created a year ago to assist the mergers, but it is still available now to capitalise the resulting financial institutions. The Spanish Government approved the Savings Bank Law which sets a minimum 10% of core capital for these financial organisations, which has to be reached before the end of September 2011. It is one point higher that Basel III minimum standards. Therefore the 30^th September deadline was set to ask FROB for money in the current process of capitalising the recently created banks. However, the help comes with conditions, which mean partially and temporarily intervening and nationalising the bank. ‘El Periódico de Catalunya’ newspaper, based in Barcelona, published in its Tuesday edition a piece of news that stated that CatalunyaCaixa, Unnim, CAM and Nueva Caja Galicia would be nationalised this summer. CatalunyaCaixa would be receive in July 1.718 billion euros from the FROB. Unnim would see its change taking place in August, with 568 million euros. This morning, CatalunyaCaixa and Unnin denied this news and claimed there were false. In addition, Unnim stressed that it still had until the 30^th September to find the required capital.

According to ‘El Periódico de Catalunya’, the Bank of Spain (the banking system's regulation body) would have decided not to wait for the end of the deadline to intervene in the finances of four savings banks. The Bank of Spain would act this summer and would not wait for the savings banks to present a formal petition for FROB money before the 30^th September. CatalunyaCaixa, Unnim, CAM and Nova Caixa Galicia would be partially and temporarily nationalised, with a total maximum expenditure of 8.171 billion euros. 1,718 million euros would be allocated to CatalunyaCaixa and 568 million euros to Unnim, which is the result of the merger of Caixa Manlleu, Caixa Terrassa and Caixa Sabadell. Both interventions would take place in August, while CAM’s would be in July and the Nova Caixa Galicia’s in September. The reason for the different timeframe is that the four savings banks are at different stages regarding their transformation into private banks or in their capitalisation process.

CatalunyaCaixa has already created its own private bank, called Catalunya Banc. In July, CatalunyaCaixa expects to transfer all its banking business to this private bank. Unnim is also in the process of transferring its business to a private bank, although it still has not abandoned the idea to participate in the merger of Cajastur, Caja Extremadura and Caja Cantabria. In fact, if that process is finally accomplished, the Bank of Spain would have fewer arguments to intervene Unnim.

Both Catalan savings banks deny the news

Sources from CatalunyaCaixa denied the rumours published by ‘El Periódico’ early on Tuesday morning to ACN (the Catalan News Agency). They explained that they are in the process of transferring their banking business to Catalunya Banc, which will be accomplished in July. They expect this operation will facilitate their access to private investors and capital to strengthen its position.

‘Unnim’ also denied the news. Sources from ‘Unnim’ explained to ACN that their capitalisation plan is to continue looking for private investors, a plan that has been previously approved by the Bank of Spain. ‘Unnim’ is waiting to see how this capitalisation process goes to make a final decision on applying or not for the FROB money. They stressed that the deadline to file the requests will expire on the 30^th September. Before this deadline and depending on the results of its capitalisation process, they will decide if the savings bank goes for a merging operating, participating in an existing merger or merging with another savings bank to create a new financial institution via the cold merger formula. The other envisaged option is consolidating the process of passing all its banking business to a private bank, which could allow the entrance of new capital, including the FROB’s.