Spain’s new caja group eyes IPO
By The Financial Times
The newly created Spanish banking group led by Caja Madrid, the unlisted savings bank, will list on the stock market to increase its capital once it has details of Spain’s proposed new regulations.
Chairman Rodrigo Rato, a former finance minister and managing director of the International Monetary Fund, said Caja Madrid and six other savings banks had decided on “100 per cent integration” of their businesses into the new Banco Financiero y de Ahorros (BFA), Spain’s third-biggest bank by assets.
The Spanish government prompted a rush to create banks by the unlisted cajas when it threatened to nationalise cajas that failed to recapitalise themselves with private or state money this year.
La Caixa, the Barcelona savings bank, last week launched Caixabank, a bank with a book value of €20.6bn ($28.2bn).
Banca Cívica, another bank created by three regional cajas, also said on Monday it planned a stock exchange listing.
Caixabank is to have a core tier one capital ratio of 10.9 per cent of risk-weighted assets under the current Basel II capital adequacy rules, well in excess of the 8 per cent minimum for Spanish lenders decreed by Elena Salgado, finance minister.
BFA’s plans are less advanced but Mr Rato unveiled pro-forma 2010 results showing that it had more than €328bn in assets and that it had just spent €9.2bn on cleaning its balance sheet through provisions and write-offs for its property loans, much of it from the €4.46bn provided by the fund for orderly bank restructuring (Frob).
The new bank’s book value is calculated at €10.24bn, and its core capital ratio is 7.04 per cent, making it almost inevitable that it must raise more capital through an equity listing or the sale of industrial holdings. Mr Rato did not reject the idea of following La Caixa and creating a “bad bank” of repossessed properties that could be moved off the bank’s balance sheet to strengthen capital ratios. “It’s undoubtedly a possibility,” he said. “It’s within our reach.”
Ms Salgado has said the maximum in extra capital required by the cajas is €20bn, on top of the €15bn already provided by the Frob and by deposit guarantee funds. In a report on Monday, JPMorgan Chase said Spanish lenders might require an extra €38bn of new capital.
Prime minister José Luis Rodríguez Zapatero, who launched the latest round of savings bank reform in an Financial Times interview in January, conceded on Monday that some cajas would probably fail to secure new capital from private investors.
But he said the Frob, which has until now lent at a punitive 7.75 per cent interest rate, would ultimately profit from any rescues. “There’s no reason for taxpayers to lose money,” he told Spanish television