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Three Further Spanish Banks to be Nationalised

Sun 18th Sep 2011

Spain's Fund for Orderly Bank Restructuring, FROB, is about to spend an estimated €5 billion to save three Cajas by the end of this month.

Industry sources report how NovaCaixaGalicia, Caixa Catalunya and Unnim may seek an injection of cash from the fund after failing to submit their plans to secure new investment.

All three of the cajas were established as a result of last year's round of restructuring which saw the country's number of banks reduced from 45 to 17, and required many of them to create their own commercial banks.

As part of a second wave of banking reforms earlier this year, the country ordered the remaining banks to ensure they had core capital ratios of at least 10% of risk-weighted assets, which could be reduced to 8% if they were listed on the stock exchange were able to secure enough outside financial investment by the end of September.

The Bank of Spain originally estimated that the banking system would require a €15 Billion injection of cash, however many industry analysts now estimate that the final figure could be as much as €50 billion.

Banks who seek investment from FROB will become partly nationalised.

Earlier this year the troubled CAM bank was taken over by the Bank of Spain, who hope to sell on the Caja by the end of November.

In addition to the three banks that the Bank of Spain is about ot bail out, Liberbank and BMN (Banco Mare Nostrum) have been given an eleventh-hour reprieve with which to secure further funding.

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