Zapatero: Caja Reform Will Bring Economic Stability and Jobs
January 31st, 2011
In the space of a few days, two of Spain’s saving banks have announced plans to list themselves on the stock market.
La Caixa’s plan was approved on Thursday and is designed not only to meet Spain’s requirements but also to prepare the new bank for stringent capital adequacy requirements.
La Caixa has the biggest retail banking share in the domestic Spanish market, but will technically remain a traditional Spanish savings bank.
The organisation will be formed by a listed bank, provisionally named Caixabank and with a value of €20.6bn, a domestic bank operation and its foreign bank operations in Hong Kong, eastern Europe, Portugal and elsewhere.
La Caixa is expected to be the 10th biggest in the eurozone by market capitalisation.
And today, the Spanish savings bank group led by Caja Madrid has agreed to become a commercial bank and said Monday it will list its shares on the stock market to raise capital and meet the new requirements.
The announcement was made by Caja Madrid’s group chairman, Rodrigo Rato – a former IMF managing director and Spanish finance minister.
The bank is a merged entity of seven savings banks called called Grupo Financiero y de Ahorros and was created last year, it is Spain’s third largest bank.
Spain’s savings banks are currently the centre of the governments efforts to restor financial confidence in Spain. Last week the government raised the core capital ratio requirement from 6 to 8 per cent for banks, while the savings banks woill require between 9-10 per cent.
The Spanish Prime Minister, Jose Luis Rodriguez Zapatero, said during a TV interview today that the reforms of Spain’s savings banks was key to getting credit flowing again.
All savings banks in Spain must meet Spain’s new capital requirements by September, and Zapatero said “it’s probable that not all will manage. The state’s bank-rescue fund will buy shares in those that fail to raise capital and will later sell the stock to private investors.”
“There’s no reason for the public sector to lose money,” he said. “In fact it is foreseeable that it will earn money.”
Zapatero hopes that new financial stability will then allow the country to focus on its high unemployment rate and concluded by saying that “if economic recovery continues, the country should see net job creation in the second half of this year.”
