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Spain's CAM Bank Rescue to Cost €15 Bln

Source: Bloomberg - Tue 14th Jan 2014
Spain's CAM Bank Rescue to Cost €15 Bln

Spain's 2011 bailout of savings bank Caja de Ahorros del Mediterraneo (CAM) may cost as much as €15 bn because its assets performed worse than expected, Economy Minister Luis de Guindos said.

Banco Sabadell SA (SAB) bought the failed savings bank known as CAM for €1 after Spain's deposit-guarantee fund, financed by the nation's banks, injected €5.25 bln into the lender and offered guarantees against certain assets souring, shielding the national budget from losses.

De Guindos said yesterday the assets included in the so-called asset-protection plan had performed worse than predicted, and the total cost of the cleanup may amount to as much as €15 bln. By comparison, Bankia SA, the lender whose nationalization in 2012 pushed Spain to seek a European banking bailout, took €18 bln of European rescue funds and transferred about €22 bln of real estate-linked assets to the nation's so-called bad bank.

The additional costs for CAM, based in Alicante, southeastern Spain, will be borne by the deposit-guarantee fund, not the taxpayers, an Economy Ministry spokesman said.

In the 2011 deal, brokered in the last weeks of Spain's previous, Socialist government, the deposit-guarantee fund recapitalized CAM, which had run up losses of €1.73 bln in the first 9 months of the year. The fund then agreed to guarantee 80% of losses that may arise from €24.6 bln of problem assets, Sabadell said at the time.

Read the timeline of the Cam Bank Collapse to Rescue archive by clicking the link > HERE <

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