Bank of Spain takes control of CajaSur after merger talks fail
THE Bank of Spain took over the running of Spanish savings bank CajaSur this weekend after its planned merger with another of the country’s small lenders failed.
CajaSur will now have access to the Fund for Orderly Bank Restructuring (FROB), the Bank of Spain said in a statement. “This action, which we have taken as a result of the viability problems presented by CajaSur and the impossibility of closing its merger with Unicaja, will guarantee that it can continue to operate and fulfill its obligations,” the central bank said.
CajaSur accounts for nearly 0.6 per cent of Spain’s financial system’s assets, which will not be affected in any way by the intervention, the Bank of Spain said. The FROB, with a funding capacity of up to €99bn (£86bn), was set up by the government last June after the Bank of Spain was forced to take over the running of savings bank Caja Castilla de la Mancha. The FROB is expected to provide at least €500m in financing to bolster Cajasur’s balance sheet.
Spanish banks have largely weathered the global financial crisis thanks to strict regulatory oversight, but the bursting of a decade-long housing bubble has left them with a more than €300bn debt hangover.