The bad bank is not willing to sell itself off cheaply. Its management has rejected the participation in its capital of the funds Cerberus, Fortress and Centerbridge, as it considers that the conditions they were imposing are unacceptable, as explained by sources aware of the negotiations between the bad bank and the funds.
The three U.S. companies, known as “vulture funds” because they usually invest in or acquire drifting businesses at very low prices, were demanding certain privileges, such as priority access to the services of the bad bank and discounts on properties and credits which are available on sale. The bad bank has said no as it considers that it would mean granting them a privilege in the face of other investors, including the current shareholders.
The intention of Cerberus, Fortress and Centerbridge was to participate in the capital increase for about 1200 million Euros which will be carried out by the bad bank before the 28th February in order to absorb the 15000 million Euros in allocated properties and toxic credits from Banco Ceiss, BMN, Liberbank and Caja 3, the other four institutions – together with Bankia, Catalunya Banc, Novagalicia Banco and Banco de Valencia – which will receive public aid from the European rescue fund,.
The management of the bad bank, supported by the European Commission, the ECB and the IMF, considers that the current proportion of foreign capital in the company “is suitable” and that the first international shareholders – Deutsche Bank, Barclays and AXA – and all national ones have declared their intention of increasing their participation subscribing a part of this second expansion. (…)
This Friday, the vice-president of the European Commission and commissioner for Competence, Joaquin Almunia, has declared that the bad bank, which will be operational for 15 years, forecasting no losses in any of those years, “is well designed”, even though their management team prepare a new business plan different to the one drafted by the Government. “We have to wait for the money to start flowing in so as to start showing good results as soon as possible; if it is managed as we would like it to, it will be a very effective option”, Almunia has declared.