Four 'caja' savings banks agree to merge

Following criticism of the Spanish Banking system by the IMF, four Spanish ‘caja’ savings banks have announced merger plans.

CAM, Cajastur, Caja Cantabria and Caja Extremadura have agreed to merge and will have between them 135 billion € in assets, 2,300 offices and 14,000 employees. This collaboration will also make them the third largest Caja in Spain.

The terms of the merger mean that each f the four cajas will keep its key personnel, its regional identity, its governing bodies, and its independent social works. Policies related to risk, treasury, credit rating, internal control and regulatory requirements will all be brought under the same communal umberalla.

An outline proposal has been signed by the Chairmen and Directors of all four cajas, and has been forwarded to the Bank of Spain for final approval. Once the necessary authorization has been given the merger can be completed.

This week a team of IMF experts has been in Madrid for their annual revision, and has reiterated that Spain should take urgent action to bring the state defecit under control.

Just one area of their suggested reforms was for changes to the Caja savings banks, but additionally they are urging reform of the labour market, fiscal consolidation and the restructuring of the banking system overall.

The IMF recommends cheaper sackings and redundancies and a tighter reign on the financing of the autonomous regions.

IMF experts said that the recovery of the Spanish economy was ‘weak and fragile’ and that growth will only be between 1.5% and 2% in the medium term.