Sabadell open to tie-ups with Spanish savings banks

Lender denies being in talks to absorb CatalunyaCaixa

With the Spanish banking sector in a state of flux, medium-sized lender Banco Sabadell said Thursday it was open to possible opportunities but denied it was in talks on a tie-up with Catalan savings bank CatalunyaCaixa.

"There is nothing on the cards nor have there been talks," Sabadell Chairman Josep Oliu told reporters at a presentation of the bank's earnings for last year. "There is nothing in line with respect to any Catalan or non-Catalan savings bank but the future is open," he added.

Economy Minister Elena Salgado announced Monday that the minimum core capital ratio for the country's banks will be raised to 8 percent from 6 percent, adding Wednesday that in the case of weaker savings banks, or cajas, the figure could be as high as 10 percent. She said cajas that fail to achieve the new requirement by the fall will be required to transform themselves into commercial banks in order to receive an injection of capital from the state's Orderly Bank Restructuring Fund (FROB).

CatalunyaCaixa, which was formed last year through the merger of three Catalan savings banks, currently has a core capital ratio of 6.7 percent. But analysts are skeptical about the ability of some of the savings banks to raise funds from the private sector to meet the new solvency requirements.

Oliu said that Sabadell is focused on growing organically and on consolidating recent acquisitions such as Banco Guipozcoano, which it bought last year.

Profits fall

Sabadell's net profit in 2010 fell 27.3 percent to 380 million euros as net interest income fell 8.8 percent and as provisions increased for loan defaults.

The bank's non-performing loan ratio rose slightly to 5.01 percent. The bank said its exposure to the ailing real estate/construction sector stood at 10.17 billion euros, equivalent to 13.9 percent of its loan portfolio, with a default ratio of 15.3 percent.

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