Brussels, 25/07/2013 (Agence Europe) - On 25 July, the European Commission approved the restructuring plan of the Spanish bank Banco Gallego, which almost went bankrupt following the real estate crisis in Spain and has been owned by NovaCaixaGalicia (NCG) since the end of last January.
This plan is part of the NGC restructuring plan (see EUROPE 10740) in which Banco Gallego will be sold to Banco Sabadell, one of the top five banking groups in Spain, which will carry out an in-depth restructuring of Banco Gallego and integrate it in its own business (Banco Gallego will cease to be an independent undertaking). The total amount of state aid paid to Banco Gallego will amount up to approximately €867 million in the form of capital injections or equivalent measures and up to €806 million in guarantees.
The Commission concluded that the total cost of the sale, including other support measures, was lower than the cost of simply winding down the bank. Once integrated into Banco Sabadell, the bank will return to long-term viability without continued state support, while provision is made for a sufficient own contribution to the cost of restructuring. In addition, the disappearance of Banco Gallego as a standalone entity will further limit the distortions of competition brought by the aid. (FG/transl.fl)