Government mulls grouping nationalized banks together

The government has opened up the possibility of creating a giant state-owned bank around the nationalized BFA-Bankia, which could absorb Caixa Catalunya and Novagalicia, which have also come under the tutelage of the state.

After his appearance before Congress on Wednesday, Economy Minister Luis de Guindos told reporters that the government may backtrack on its plans to put Catalunya Caixa and Novagalicia, which are currently in the hands of the state Orderly Bank Restructuring Fund (FROB), up for tender to the best bidder. Under the current distraught situation of the markets, the feeling is that private-sector offers for the two lenders are likely to be unattractive.

A similar situation prevails in the case of Banco de Valencia, which has also been taken under the wings of the state.

“We have a new situation with the nationalization of Bankia by the FROB, and in a certain way that opens the possibility for measures of combination, of analysis,” De Guindos said. “In the end run, the objective is to clean up the Spanish financial system. The government is taking stock. All options are open.”