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Spanish caja reports fall in profits

Fri 28th Jan 2011

Spain's second largest caja - La Caixa - today reported a 12 % fall 2010's net profit to 1.5 billion euros as the country's struggling economy is driving levels of bad debt even higher.

Ony yesterday La Caixa announced that it would be transforming from a caja to a new listed bank called CaixaBank, as it had a been successful in generating a core capital ratio of 8.6 %, above the new government requirements of 8 %, which were reported earlier this week.

At the end of last year the caja reported a ratio of bad debt which had increased to 3.7 %.

La Caixa intends to transfer its banking business to its listed holding company, Criteria, while they in turn will transfer some of its commercial stakes in other businesses to a new entity. CaixaBank proposes to strengthen its capital position through the launch of convertible bonds for up to 1.5 billion euros.

Spain's cajas are one of the major concerns over the stability of Spain's economy and fears that it may require a financial bail-out as seen in other European countries. The government has given the cajas until September to raise sufficient private capital, otherwise it will step in to partly nationalise them. La Caixa is the first such caja to list its banking business.

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