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Spain to fund cajas from March
Spanish cajas struggling to raise capital due to new rules imposed last week will be able to access state funds as of March, the Spanish press reported earlier on Sunday.
The mostly unlisted cajas are highly exposed to a real estate market in crisis, and earlier last week were instrcuted to raise core capital levels by attracting private investors by September or face state intervention.
The proposal attracted criticism that some of the weaker cajas would be unable to survive the nine-month period without state funding.
"September 30 is the limit, but public money will be available to banks that ask for it from March, once they present their 2010 balance sheets," an unnamed source close to the matter told El Pais.
The bank restructuring fund - known as FROB - has to date injected over 11 billion euros into the cajas to aid an overhaul of the industry in which the number of banks has dropped in the last 6 months from 45 to 17.
The fund is currently worth 99 billion euros, but the Economy Minister Elena Salgado has commented how she does not expect the system to require more than 20 billion euros in total, far below the estimate of many independant analysts.
The second round of restructuring has been led by the largest caja - La Caixa - which last week announced that it would list its banking business via its holding company Criteria.
Many of Spain's cajas are expected to follow La Caixa's example in an attempt to shore up core capital and avoid partial nationalisation by the state.
The Government were not available for comment on the matter.