Brussels, 08/11/2010 (Agence Europe) - On 8 November, the European Commission authorised restructuring aid for the Spanish savings bank Cajasur, and the sale of its banking activities as part of its restructuring plan. It took the view that the restructuring plan for the bank contains appropriate measures to compensate the emergency aid granted in May 2010 to rescue the bank, whilst avoiding undue distortions of competition.
Due to its exposure in the framework of risky real estate operations, Cajasur, which is active mainly in southern Andalusia (Spain), was on the verge of collapse when, last May, the Bank of Spain placed it under the control of FROB (the Fund for Orderly Bank Restructuring). At the time, this fund adopted two emergency temporary rescue measures: a capital injection of 800 million to fulfil own-capital requirements and Treasury support of 1.5 billion euros to cover the bank's cash requirements until the end of the restructuring procedure.
After an “open and competitive tender", BBK, another Spanish savings bank, agreed in July of this year to take on Cajasur's bank activities. The latter undertook to pay back to FROB the 800 million injected once the sale became effective. The liquidity measure was never used. In addition, to cover the losses incurred, FROB gave a banking guarantee for five years, of approximately 392 million euros.
Under these circumstances, the Commission concluded that the distortion of competition brought about by the high sum total of the aid would be balanced by the liquidation of Cajasur and the sales of its banking activities, which will remain viable without keeping State support in place. (F.G./trans.fl)