MADRID — Spain’s biggest savings bank La Caixa announced Thursday a complex deal to list its 9.48-billion-euro retail banking operations on the market, part of a major industry shake-up.
The bank said the boards of the firms involved agreed to an outline deal transferring La Caixa’s retail banking business into its listed investment arm, Criteria, to be known as CaixaBank.
La Caixa, with 27,000 employees, 10.5 million clients and 5,300 branches, is the giant of Spain’s regional savings banks, many of them burdened with loans that turned sour when the housing bubble popped in 2008.
It is also the third largest financial institution in Spain.
The shake-up would be a major event for the share market and a potent symbol of Madrid’s attempts to clean up the savings banks’ balance sheets by pushing them to boost core capital with private investments.
There are three major steps in the operation:
— First, La Caixa will transfer its banking operations into its wholly owned affiliate Microbank.
— Second, La Caixa will transfer all Microbank shares — valued at 9.48 billion euros ($13 billion) — into its listed investment banking arm, Criteria.
— Third, Criteria will absorb Microbank and become a credit institution with the name CaixaBank.
The deal was approved by the boards of La Caixa, Criteria and Microbank, to create a structure able to comply with stricter new Spanish and international rules on banks’ balance sheets, it said in a statement released to Spain’s stock market regulator.
“The reorganisation we are announcing today is a milestone in the century-long history of our organisation,” said Isidro Faine, chairman of La Caixa and of Criteria.
“I am convinced we have chosen the option best adapted to the new challenges of the international financial sector and to the history, value and vision of our institution, which will preserve its personality as a savings bank.”
The details of a final accord will be subject to approval by the companies, and by the governmental and other relevant authorities, the banks said.
Spain’s regional banks account for about half of all lending and are considered the Achilles heel of the financial system, many of them having loaned heavily during the property boom.
Finance Minister Elena Salgado this week announced new rules on the level of rock-solid core capital — equity capital and retained earnings — that the banks must have on their balance sheets.
All Spanish lenders will have to have a core capital level equal to 8.0 percent of total assets by September, even higher than the 7.0 percent required under tough new, international “Basel III” rules agreed last year.
The government will step in to take temporary stakes in those savings banks that do not meet the new requirements by then.
La Caixa already exceeds those requirements.
As of September 30, its core capital was equal to 8.7 percent of total assets and the bank said its liquidity was among the highest of the Spanish financial system — at 22.1 billion euros ($30 billion), “practically all of it immediately accessible.”
Criteria is among Spain’s most important institutional investors.
In return for the retail banking operations, it will keep its stakes in energy giant Repsol and telecoms group Telefonica but transfer other holdings including in Gas Natural to La Caixa.
Criteria will also pay La Caixa 2.009 billion euros in shares.
And to further strengthen the future CaixaBank’s balance sheet, Criteria will raise 1.5 billion euros by issuing bonds, which can be converted into shares.
Copyright © 2011 AFP. All rights reserved.
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