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Banco de Valencia leaves shareholders broke

Source: Reuters - Tue 12th Feb 2013
Banco de Valencia leaves shareholders broke

Holders of junior debt instruments such as preference shares and subordinated debt in Spain's nationalised bank Banco de Valencia will suffer losses ranging from 85% - 90%, the country's bank restructuring fund, FROB, said on Monday.

Banco de Valencia was one of the lenders hardest hit by the bursting of a property bubble in Spain in 2008.

The FROB, which had to inject 5.5 billion into the bank, said in November it would sell the entity to the country's 3rd biggest lender, Caixabank, for the nominal fee of 1.

"The important losses are justified in order to ensure a fair share of the restructuring and resolving costs and to reduce the cost of public aid," the FROB said in a statement.

Just last week the stricken lender reported they had made losses of 3.6 Billion during 2012. CaixaBank said that the losses would not be consolodated into their own figures.

CaixaBank themselves saw their profits slide by 80% last year.

Comment on this Story

This is no surprise! Banks all around the world have been wildly speculating at high risk on continued growth and return on investments - which many were warning well in advance of the economic downturn in 1998! Allegedly, many of these banks have been working very hard to minimise their losses through back room deals with developers, other banks to buy debts exceptionally cheap, only to then declare bankruptcy or voluntary administration andthen obtain bail out cash - ultimately funded by the tax paying citizens! Meanwhile senior directors extract vast sums for themselves, then stash proceeds away off-shore to avoid discovery. Spain seems to have no power able to investigate fully, apply serious sanctions and recover stolen/fraudulent funds - wherever they might be hidden! It goes to show the bigger the corruption = the more you profit! Capitalism without safegaurds will result in revolution!
Pete - Fri, 15th Feb 2013

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