Four Spanish banks announce merger

MADRID - Four Spanish savings banks announced Monday they would merge a part of their operations to form the country’s fifth largest lender, amid concern over the solidity of the country’s savings banks.

Cajastur, Caja de Ahorros del Mediterraneo (CAM), Caja Extremadura and Caja Cantabria informed the Bank of Spain of the creation of the new banking group, which will have 135 billion euros ($167 billion) in assets, 2,300 offices and 14,000 employees.

CAM and Cajastur will hold 40 percent each, Caja Extremadura 11 percent and Caja Cantabria 9 percent of the new entity.

The four will retain their boards of management and office networks, while combining functions such as risk control and credit assessment.

The merged entity would be Spain’s third-biggest savings bank after La Caixa and Caja Madrid. The plan was expected to be approved by the shareholders of the four savings banks.

There had been concern over the solidity of Spain’s savings banks, with the Bank of Spain taking control over the running of Cajasur over the weekend.

Cajasur had run losses of nearly 600 million euros in 2009, and its planned merger with Unicaja failed.

The International Monetary Fund (IMF) Monday described Spain’s banking sector as being “sound” but as remaining under pressure, with the risks focused mainly on savings banks.

Financial analysts had watched the effect of the Cajasur case on the Madrid stock exchange, but its main Ibex-35 index only went down by 1.27 percent Monday.