Of Special Interest


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4th October 2011

Spain nationalises three more Cajas

The Bank of Spain ordered the nationalisation of three more Cajas on Friday - NovaCaixaGalicia, CatalunyaCaixa and Unnim. The three banks failed, as had been expected, to increase their Core Tier 1 (CT1) ratio to 10% by Friday's deadline. Liberbank and Banco Mare Nostrum failed also to meet the deadline but have been given a further 25 days to raise the money. The last two require relatively small amounts of new capital and are considered likely to be able to raise the amounts required.

The move cost the government €4.75bn (£4.12bn $6.41bn ¥493bn Y40.95bn)in compensation to NovaCaixaGalicia shareholders who received 12% of book price and CatalunyaCaixa shareholders who received 9%. Unnim was valued at zero - or negative and its shareholders received nothing.

Spain has done its best to stay out of the banking media during the last few months and attract as little attention as possible. In defending its banking sector to adverse reaction to the latest moves including from the rating agency Fitch Miguel Ordóñez, governor of the Bank of Spain, argued that Spain had successfully recapitalised Caja Castilla La Mancha , CajaSur and Banco Cam formerly Caja Mediterráneo. That it had also successfully encouraged mergers reducing the number of Caja by two thirds leading to the successful listing of three of the merged Caja groupings.

Banking analysts are more sceptical suggesting that Caja accounts are still not to be trusted as reporting non performing assets correctly and suggest that the authorities are aware of this but do not want the loss of confidence that a full exposure would bring. The sceptics point to the failure of the large Spanish banks to bow to central bank pressure to acquire some of the Cajas as evidence that the Caja accounts are suspect.