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BBVA will pay 1000 million Euros more to the Deposit Guarantee Fund (DGF) for not having invested in the bad bank.

Luis de Guindos, minister of Economy, declared that the DGF might need an amount between 1.500 and 2.000 million Euros in order to acquire the shares of Catalunya Banc and Novagalicia Banco from small investors who received them in exchange for their preferred stocks and subordinated debt.

The amount will be obtained through an extraordinary quota, as the DGF does not have enough funds. 40% of it will be paid in January 2014 and the rest, in seven years according to a calendar that needs to be established.

The distribution of this extraordinary quota among all institutions whose deposits are guaranteed by the DGF will be done, as usual, depending on the quota of calculated deposits of each of the institutions under the guarantee of the fund. The amount will be of three per thousand of those deposits.

Should this extraordinary quota be even, then it would only be necessary to distribute the 2000 million Euros between each institution depending on their quota and that would be the end of it. The problem is that the decree establishes that the committee of the DGF, made up of twelve members, six of which belong to the Bank of Spain while the rest represents the financial institutions, can make important modifications on this distribution.

They may decide whether or not those banks with public aid should participate. This would reduce considerably the number of institutions that need to pay the 2000 million Euros. They may also decide that those smaller institutions, that do not reach a volume of 5.000 million Euros in deposits, only pay half the amount. This would be an important amount for these institutions, but rather small on the total amount.

Finally, the royal decree allows that those institutions which are a part of the bad bank can deduct up to 30% of the total amount transferred to Sareb from the amount they would need to pay. 16 banks are now shareholders of the bad bank, with an investment of 24.706 million Euros. That is, if they are authorized, they could reduce their contribution to the GDF by 741.8 million Euros.

If those who have received public aid are also exempt, the amount to be paid by all others would increase by 440 million Euros. Also, if those who have transferred amounts to Sareb may deduct 30% of this contribution, BBVA will have to contribute with 740 million Euros as it is the only important institution that has not participated in the creation process of Sareb. The three per thousand of its deposits would also need to be added to that amount. In total, more than 1.000 million Euros, that is, more than half of the total quota. (…)

There has been no official reaction from BBVA. Nevertheless, the fact that they will need to contribute with half of the extraordinary quota has been a surprise as they were confident that the Troika would prevent this measure as they would see it as discriminatory.