CatalunyaCaixa to be put up for auction after Easter, announces the Spanish Economy Minister

Madrid (ACN).- The Spanish Minister for the Economy, Luís de Guindos, in charge of pushing for the main structural reforms, said on Thursday that the Catalan bank CatalunyaCaixa will be put up for auction next week. CatalunyaCaixa has been managed by the Spanish State since it was intervened by the Bank of Spain on September 30^th, as it could not meet the new core capital requirements. 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. 6 days ago, on March 30^th, CatalunyaCaixa presented its results for 2011. Despite its banking business having a profit of €304 million, the bank had a total loss of €1.335 billion because it allocated €1.505 billion in provisions for expected losses in its real estate business. The Catalan bank has €77.075 billion in assets, a network of 1,164 branches and 7,200 employees.

The Spanish Government will put CatalunyaCaixa and the Banc de València up for auction next week, just after Easter, as announced on Thursday by Luís de Guindos in an interview with Reuters. “In the next meeting of the FROB (the Spanish Fund for Orderly Bank Restructuring) the privatisation process of both will start […] the process will be significantly sped up; we want to conclude it before the summer”, he stated.

“There is no other European country where the banks have gone through such drastic adjustments as in Spain”

De Guindos also talked about the new reform of the Spanish banking sector, which will oblige banks to present the Bank of Spain with their plans to meet the required capital provisions, with which they have to face their exposure to real estate investments. De Guindos defended the Spanish Government’s financial reform: “there is no other European country where the banks have gone through such drastic adjustments as in Spain”.

All merger projects to be announced before May 31^st

The real estate provision plans will have to be approved by the Bank of Spain within the next 15 days, before April 24^th. Furthermore, financial entities have until May 31^st to present their merger projects. In general terms, banks have 1 year to get those provisions, although those participating in merger processes will have 2 years.

Spain’s banking sector is putting €52 billion for real estate provisions

After analysing the needs with very strict criteria, the banking sector has to reserve €52 billion to face hypothetical losses in their real estate business. This total amount is meant to be a firewall to protect the entire Spanish banking system from value depreciations of their investments related to the real estate business.