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14 May 2012

FT: Spanish banks eye four-way merger


Four Spanish savings banks are working on a merger supervised by the ministry of economy that could create the country's fifth-largest lender with assets of €270 billion, people close to the talks said.

Banco Mare Nostrum, Liberbank, Unicaja and Ibercaja have been encouraged by the Spanish government to devise a tie-up between some or all of the lenders to create a more solvent group.

Analysts have expressed concerns that the government could repeat the mistakes of Bankia, a merger of seven savings banks in which Spain took a €4.5 billion stake last week – the country’s largest nationalisation since the crisis began.

“Merging weak banks does not create a strong bank. That should be obvious by now”, said one banking analyst.

Meanwhile, Spain’s five largest banks have said they will set aside €14 billion in new provisions following the country’s fourth reform programme for its lenders since the start of the financial crisis.

No bank has yet said it will take financial aid from the state as a result of the new provisions, which come in the form of loans costing about 10 per cent interest a year that can be converted into common equity if not paid back.

Full article (FT subscription required)



© Financial Times


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