Leaves us cold

25 May 2010 By Fiona Maharg-Bravo

Four savings banks plan a partial merger to create the country’s fifthlargest lender. Pooling capital should give the banks improved access to funding, but will yield only limited cost savings and involve execution risks. Besides, the combined entity will still need state cash.

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Four Spanish savings banks agreed to create a Sistema Institucional de Proteccion (SIP) to create the country's fifth largest lender by assets.

The four entities Caja Mediterraneo (Cam) from Valencia; Cajastur from Asturias, Caja Extremadura; and Caja Cantabria would have combined assets of more than 135 billion euros and turnover of more than 177 billion euros.

At the end of last year, the combined bank would have had a Tier 1 capital ratio of 9.4 percent of assets, 14,000 employees and 2,300 branches. It would be jointly controlled by Cam and Cajastur with 40 percent each, while the Extremadura and Cantabria cajas would hold 11 percent and 9 percent respectively.

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