Brussels, 20/12/2012 (Agence Europe) - The European Commission has approved the restructuring plans of four Spanish banks, Liberbank, Caja3, Banco Mare Nostrum (BMN) and Banco CEISS. These banks are expected to become viable again in 2017, due to an injection of public funds from the European Stability Mechanism (ESM) and the FROB (Spanish Fund for Orderly Bank Restructuring). On Thursday 20 December, Commission vice president, Joaquín Almunia (competition) announced that in exchange for this agreement the banks will significantly reduce their most risky banking and real estate ventures, proceed to widescale selloffs of assets and reorient towards retail banking and loans to SMEs in the regions where their main business is based.
The funds provided to the four banks represent a total of €1.9 billion, representing less than 30% of the €6,248 million capital shortfall identified in the stress test. The rest will be covered by the burden sharing exercise (which will provide more than €2 billion in hybrid capital of the debt subordinated to preferential participation, as well as for 1 billion in the sell-off of assets and shares, explained the Commissioner). They will be distributed as follows: - BMN will receive €730 million, in addition to €915 million from FROB 1 securities issued in 2010. In exchange, it will have to downsize by 40% at the end of the process compared to its size in 2010 and reorient to its main region (Murcia and the rest of the Mediterranean coast). During the restructuring exercise, it will be quoted on the stock exchange; - CEISS will obtain €604 million in social capital and has already received €505 million in securities from FROB 1. It will have to downsize by 35% and focus on its region of origin. - Caja 3 will receive €47 million in convertible bonds and will be entirely incorporated into Ibercaja, to ensure its return to viability by 2017. - Liberbank will receive €124 millions in convertible bonds and will have to downsize by between 20 and 25% and focus its activities in the Cantabria, Asturias, Extremadura and Castilla La Mancha regions. The sale of shares in the company's non-essential areas of business by the four banks is also expected to help fund the cost of their restructuring.
This new approval comes after the authorisation of a €37 billion injection of capital into four other Spanish banks nationalised at the beginning of the month (see EUROPE 10740). The restructuring process will conclude in 2017 and will be strictly supervised by the Commission, explained the Commissioner. (FG/transl.fl)