Government to limit influence of ‘cajas’ on their banking arms

In an effort to appease Brussels, the Spanish government is drawing up legislation that will severely limit the composition of the boards of savings banks, or cajas, and so-called “banking foundations” in order to reduce their control of their commercial banking arms.

In a proposal sent to the European Commission, the administration plans to exclude from the cajas’ boards all active politicians and members of labor unions and business organizations. This limitation will be extended to two years after a board member leaves the caja. The government also intends to cap the number of caja board members appointed by public administrations to 25 percent, down from 40 percent at present.

The European bailout granted to Spain for its banks calls on the administration to clarify the role of the cajas as shareholders in commercial banks, reducing their interest to levels that do not afford them control of the banks.

However, the document sent by Madrid to Brussels seeks to circumvent this to allow cajas such as La Caixa, Kutxa and Ibercaja to remain in control of their respective commercial banking arms through their “banking foundations”, but at the same time reducing the “political influence” of these foundations in the affairs of the bank. “The objective is to achieve greater control of this type of shareholder of the banks, promoting their loss of control of the banks,” the document says.