Savings banks want more time to increase capital

The Spanish Confederation of Savings Banks has asked the government to give the sector more time to meet the new solvency requirements.

The government is raising the minimum core capital ratio from 6 percent to 8 percent and to 10 percent in the case of unlisted banks heavily reliant on the wholesale market for funding. Banks have up until September to do so. Lenders unable to raise the necessary funds will be required to transform themselves into commercial banks so that the state Orderly Bank Restructuring Fund (FROB) can inject capital into them in what would be a partial and temporary nationalization.

In a statement released late Wednesday, the CECA said it was working with the government on a number of issues, including the "extension of the timeframe" for banks to increase their capital, particularly those planning to seek a stock market listing.

An Economy Ministry spokesman said Wednesday that the September deadline remains in place. The government is expected to approve the new rules for the sector on Friday through a royal decree.

The CECA is also negotiating a lower minimum solvency ratio for unlisted savings banks or the extension of the definition of what constitutes acceptable forms of capital for the requirement.

The commercial bank established by Caja Madrid, Bancaja and five other Spanish savings banks will seek a stock-market listing this year to meet the new capital-adequacy requirement. Banca Cívica, which also resulted from the tie-up of a number of savings banks, has said it plans to float up to 40 percent of its commercial bank arm, while La Caixa plans to fold its banking business into its listed unit Caixacorp Criteria, which will be transformed into a commercial bank.