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Latest Spanish Bank -Banco Financiero y de Ahorros - reveals its hand

Mon 31st Jan 2011

Caja Madrid intends to list its newly created bank - the third biggest in Spain - on the stock market in order to meet new government capital requirements, echoing a move by rival, La Caixa, last week.

Spain's cajas have been forced theinto mergers and to raise capital to reassure debt markets that they won't require a bailout as seen in other EU Countries. Caja Madrid - Spain's second largest caja after La Caixa - has created a new Bank called Banco Financiero y de Ahorros (BFA).

The Bank's Chairman, Rodrigo Rato, spoke to Spain's press earlier today whilt giving a presentation of Caja Madrid's 2010 figures "We are taking the steps to set up an institution which can be listed...But we need to see the full details of the new reform before setting a date."

The new Bank also released a statement to the securities regulator, giving their intention to begin the paperwork for its listing in February.

Mr Rato said BFA is considering moving it's bad debts to another entity, commenting "That's undoubtedly a possibility for us, just as others have done."

Caja Madrid said BFA held a core capital ratio of 7.04% at the end of 2010, which falls short of the 8 % requirement in order to avoid partial nationalisation. La Caixa began the process last week by moving all of its bank assets into its already listed Criteria holding company, signaling possibilities that it could take over weaker cajas struggling with the country's real estate collapse. Banca Civica, another group of merged cajas, reported earlier today that it could launch a public listing and that its core capital ratio stood at 8.05 % at the end of last year.

Caja Madrid revealed that BFA - third in Spain behind giants Santander and BBVA - had proforma net profit was 440 million euros in 2010, as provisons against loan losses weighed on the bottom line. Provisions totalled 9.2 billion euros, while bad loans rose to 6.34 % of the total loan book at the end of December.

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