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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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