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Three Spanish lenders bid for Catalunya Banc

Source: Reuters - Thu 28th Feb 2013
Three Spanish lenders bid for Catalunya Banc

At least 3 Spanish banks have submitted non-binding bids for nationalized lender Catalunya Banc, three sources familiar with the auction said on Thursday.

The sources said top player Santander, eager to beef up their market share in its domestic market, Sabadell and Popular were among the bidders. Reuters could not confirm if BBVA had presented an offer.

The 4 banks declined to comment.

Non-binding bids were due on Thursday, and if the auction progresses - a process that will depend on whether offers are high enough to satisfy the state - a deal could be sealed in the coming weeks.

Catalunya Banc, one of the top lenders in the northern region of Catalonia, had to be bailed out with European funds to the tune of €9 billion last year, to rebuild its capital after it was hit by Spain's property crash 5 years ago.

It has now been cleaned up after transferring rotten real estate assets to a government-backed 'bad bank', though the European Commission expects the lender to report losses over the next 2 years.

So far, its market share in Catalonia - it ranks second behind Caixabank in one of Spain's richest regions, which accounts for about 19% of the economy - has been reason enough to draw initial interest from bidders.

Spain's 2 biggest banks with large overseas operations, Santander and BBVA, have each said they want to grow domestically and confirmed in the past few weeks they were studying Catalunya Banc.

"It's one of the last operations that would give a bank a relevant market share in Catalonia," one source familiar with the auction said.

But the Catalunya Banc sale is the first auction of a rescued bank in Spain - where several lenders have already been nationalized and sold off in the wake of the property crash - that will not come with an asset protection scheme.

Such a scheme would normally protect buyers from future losses at the expense of the state. The lack of such a scheme could dampen the process, and put bidders off from offering high offers for the group.

Economy Minister Luis de Guindos insisted in an interview with Reuters on Tuesday that there would be no asset protection scheme as part of the sale.

Spanish lender Kutxabank and private equity firm JC Flowers, initially considered as potential bidders, have not put in non-binding offers, several sources said.