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Banco Sabadell denies further Caja acquisition

Fri 28th Jan 2011

Amid the state of uncertainty within the Spanish industry, Banco Sabadell reported yesterday how it was open to possible opportunities, but denied it was in talks regarding a merger or acquisition with the smaller lender, CatalunyaCaixa.

"There is nothing on the cards nor have there been talks," Sabadell Chairman Josep Oliu announced to the press during a presentation of the bank's figures for 2010. "There is nothing in line with respect to any Catalan or non-Catalan savings bank but the future is open," he continued.

Earlier this week Spain's Economy Minister, Elena Salgado, stated that the minimum core capital ratio for the country's banks will be raised from 6% to 8%, later adding that in the case of weaker cajas the figure may be increased to 10%. Cajas that fail to achieve the new requirement by September will be required to transform themselves into commercial banks in order to receive an injection of capital from the state's Orderly Bank Restructuring Fund (FROB).

CatalunyaCaixa, which was only created towards the end of 2010 through the merger of three Catalan cajas, currently has a core capital ratio of 6.7%%, but observers are uncertain of the ability of certain other cajas to raise funds from the private sector to meet the new solvency requirements.

Oliu stated how Sabadell is now focusing on organic growth and not on consolidating recent acquisitions such as Banco Guipozcoano, which it bought in 2010.

Sabadell's net profit last year fell by 27.3% to 380 million euros as net interest income fell 8.8% and as provisions increased for loan defaults.

The bank's non-performing loan ratio incraesed to 5.01%, but its exposure to the struggling property market stood at 10.17 billion euros, equivalent to 13.9% of its loan portfolio, with a default ratio of 15.3%.

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