Report: Spanish Bank Seeks Cash from Rescue Fund

Tuesday, 01 Jun 2010 07:28 AM


Spain's second-largest savings bank Caja Madrid is seeking up to 3 billion euros ($3.65 billion) from a government rescue fund set up to promote mergers among the country's network of unlisted regional banks, El Pais reported on Tuesday citing financial sources.

No-one at Caja Madrid was immediately available for comment.

The bank — in talks with five regional savings banks (Caja Avila, Caja Insular de Canarias, Caixa Laietana, Caja Segovia and Caja Rioja) — plans to repay the money in less than two years, the report said.

The government has set a June 30 deadline to tap money from the 99 billion euro Fund for Orderly Bank Restructuring (FROB).

It wants the sector to merge after credit quality declined sharply due to heavy exposure to the country's property boom and bust.

Spanish commentators expect the network of 45 'cajas' to shrink to around 20 after the overhaul.

The central bank took over CajaSur, a 146-year-old ailing lender controlled by the Catholic Church, on May 22, a warning to other savings banks delaying mergers.

The government wants to complete the overhaul by the end of this month.

The Bank of Spain has proposed new rules aimed at forcing Spanish banks, who are owed over 300 billion euros by property developers, to take the hit for bad loans sooner.

© 2015 Thomson/Reuters. All rights reserved.

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