Former Treasury chief to be named as head of bad bank

The Orderly Bank Restructuring Fund (FROB), which operates under the auspices of the Bank of Spain, plans to name former head of the Treasury Belén Romana García to chair a so-called “bad bank,” which is being set up to absorb the toxic assets of the country’s lenders, EFE quoted financial sources as saying Tuesday.

Romana’s name has been in the hat for a number of posts of late, including that of the chief of the European Stability Mechanism (ESM) and the presidency of Spain’s National Securities Commission (CNMV). She is considered to be a close advisor to Economy Minister Luis de Guindos.

The Banking Restructuring Asset Management Corporation (Sareb) is due to be up and running at the start of next month. It will have capital of five billion euros, of which one billion will be in equity and four billion in subordinated debt.

The Sareb will absorb up to 90 billion euros in damaged assets derived mainly from banks’ exposure to the moribund real estate sector. It will initially take on board assets of up to 65 billion euros from the four banks that ran into difficulties and have been nationalized. These are Banco de Valencia, Bankia, CatalunyaCaixa and Nova Galicia.

The sources said the FROB is expected to announce Romana’s appointment at a board meeting on Thursday.

The 48-year-old Romana is currently a member of the boards of Spanish bank Banesto, a unit of Banco Santander, and stainless steel manufacturer Acerinox, which she combines with the post of the general manager of the business association Círculo de Empresarios. From 2008 to 2010 she was director of strategy and corporate development of Spanish telecommunications group ONO.

Romana headed the debt management arm of the Economy Ministry from July 2003 to February 2005.