THEAntitrust of the European Commission approved the restructuring plans of Spanish banks Bankia, NGC Banco, Banco de Valencia e Catalunya Banc, giving the green light to a intervention of 37 billion euro. According to Brussels, the plans are "in compliance with the rules of the European Union on state aid".
Based on the signed Memorandum of Understanding last July between Spain and the Eurogroup, 18 billion will be allocated to the restructuring of Bankia, 9 billion will go to Catalunya Banc, 5,5 to NGC Banco and 4,5 to Banco de Valencia. The aid package is provided by the EFSF bailout fund, which will transfer the money to Frob, the Spanish bank restructuring fund.
The plan has a duration of five years and provides for the transfer of 45 billion euros of assets to the Sareb company, the bad bank created to absorb bad debts. Among the conditions for the green light to the aid plans, the divestment by Catalunya Banc in "all" capital funds, while Bankia and Catalunya Banc will have to give up their bond portfolios for trading and treasury management purposes.
It is also planned the complete sale of the Banco de Valencia, which will merge completely into CaixaBanc and will "cease to exist as an independent bank". The other three banks will have to cut their balance sheets by more than 60% over the next 5 years. In the meantime, Bankia has announced cuts to 6 jobs, equal to 28% of the total workforce.
As for the country's general economic situation, the Spanish central bank announced that "GDP will continue to fall in the last few months of 2012, when the effect of the advance purchases triggered by the VAT hike in September will reverse". The October-December period should therefore record the sixth consecutive quarter in recession.
