Unexpected €1.4 Bn Deficit Shakes the Auction of CatalunyaBanc

4/07/2014 – El Confidencial

CatalunyaCaixa´s privatization must be held on for a while. Spain´s Government has been in trouble since the bidders discovered that the bank´s deficit hole is much deeper than they had thought. According to sources with knowledge of the operation, Santander, BBVA and CaixaBank (the finalists) estimate that the purchase might generate a €1.4 billion loss which they obviously reject.

The findings come from the “due dilligence” analysis conducted by specialists given the access to the bank´s “data room”. The information provided by them clearly shows that the loan and property portfolios of CatalunyaBanc are not provisioned enough.

Santander, BBVA or CaixaBank knew they would have to return the €12.054 million bail-out of the nationalized entity but the latest news is just too much. On July 18th, the banks will plead the Asset Protection Scheme (APS) from the Goverment.

However, as the State wants to avoid the public aid and none of the entites wishes to bear such cost, finally the auction may be cancelled.

The analyses results stand in opposition to the recent declarations of the entity´s president, José Carlos Plá, who was assuring “the balance is solvent and the position of CatalunyaBanc firm”, giving as a proof the 14.36% improvement in the capital flow.

The fuss puts the sale in jeopardy and the third time suspension of the bidding seems more and more real. There have been two earlier attempts to sell the entity, one in June 2012 and the other in March 2013, both failed.

In order to dodge the waive, the Government shall decide whether or not it will give the public aid. Apart from that, it will have to explain the new assistance that will inevitably affect the citizens´ pockets.


Original article: El Confidencial (by Agustín Marco)

Translation: AURA REE