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BANKING SECTOR

Unicaja poised to close deal to purchase Caja España-Duero

Operation expected to involve 400 million euros from the Orderly Bank Restructuring Fund

After years of tough talks and negotiations, Spanish lender Unicaja is reportedly poised to close a deal to purchase Caja España-Duero, a savings bank that was created when Caja España and Caja Duero merged.

According to sources from the sector, the operation will be counting on 400 million euros of public money from the Orderly Bank Restructuring Fund (FROB), which was set up to help shore up the balance sheets of Spain’s failed savings banks after the real estate bubble burst.

Most of this money will be used by Unicaja to restructure the banks’ network of branches, many of which will have to be closed, as well as covering the cost of making job cuts. It will also be used to cover the transfer of toxic real estate assets previously made by Caja España to Sareb, Spain’s so-called “bad bank.”

Longest negotiations

The signing of the deal will bring to an end 34 months of negotiations, which would be the longest such process so far in the process of reforming Spain’s financial sector. The agreement was due to be announced on Monday, although it will still need the approval of the administrative boards of both lenders.

Once the operation is complete, Bankia, Catalunya Caixa and BMN will be the only lenders still in the hands of the Spanish state.

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