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The Commission decision finds the rescue package to be in line with its guidance on State aid to banks to overcome the financial crisis. The rescue measures are limited in time and Spain committed to submit a restructuring plan within six months that will need to demonstrate the bank's return to long-term viability, an appropriate sharing of the rescue burden and measures to address distortions of competition.
Banco de Valencia is a small bank in terms of its share of the total banking assets in the Spanish financial system, but in the regions of Valencia and Murcia, where it mainly operates, it accounts for approximately 7 per cent and 4 per cent of both credit and deposits.
This is the seventh Spanish credit institution taken over by FROB. The Commission approved restructuring aid for Caja Castilla-La Mancha and CajaSur. The Commission also approved rescue aid for Caja de Ahorros del Mediterraneo (CAM), NovaCaixaGalicia, Catalunya Caixa and Unnim. Approval of the restructuring aid for these four credit institutions is still pending.
Earlier this year, the Bank of Spain ordered 12 financial institutions to increase their solvency levels up to 8 per cent or 10 per cent of their capital principal before the end of September 2011.