Four regional savings banks in Spain to pool resources

FOUR SPANISH savings banks have announced plans to pool resources and create a joint holding group that would be the country’s fifth largest lender.

The announcement by the four cajas de ahorros– unlisted regional lenders – is the latest in a series of mergers and co-operation agreements promoted by the central bank to restructure the country's financial sector.

However, the latest merger plan was greeted with scepticism by bank analysts, who questioned the absence of any promise to cut costs or clean up balance sheets.

Unlike a merger within a single region, such as the two already approved in Catalonia, the new plan shows little scope for closing overlapping branches or cutting staff.

The Bank of Spain said any public money request from Spain’s new bank restructuring fund would be granted only in exchange for restructuring and deep cost cuts by the cajas concerned.

Caja Mediterráneo from Valencia, Cajastur from Asturias (which is absorbing Caja Castilla La Mancha after its near-collapse last year), Caja Extremadura and Caja Cantabria said they had agreed to create a Sistema Institucional de Protección (Sip) that would have assets of more than €135 billion and a tier one capital ratio of 9.4 per cent of assets.

The Bank of Spain at the weekend seized control of CajaSur in Córdoba, an ailing savings bank controlled by the Catholic church. – Copyright The Financial Times Limited 2010