- Title: SPAIN: Bank of Spain to save bank Caja Castilla la Mancha
- Date: 30th March 2009
- Summary: MADRID, SPAIN (MARCH 29, 2009) (REUTERS) VARIOUS EXTERIORS OF BANK OF SPAIN VARIOUS EXTERIORS OF CAJA CASTILLA SAVINGS BANK VICE PRESIDENT MARIA TERESA FERNANDEZ DE LA VEGA AND VICE PRESIDENT AND ECONOMY MINISTER PEDRO SOLBES ENTERING ROOM FOR NEWS CONFERENCE MEDIA TAKING PICTURES (SOUNDBITE) (Spanish) VICE PRESIDENT MARIA TERESA FERNANDEZ DE LA VEGA, SAYING "The Ministers Cabinet has approved a Royal Decree-Law for which to authorize grant guarantees from the financier that the Bank of Spain could provide in favour for saving bank Caja de Ahorros de Castilla La Mancha" JOURNALISTS ATTENDING PRESS CONFERENCE (SOUNDBITE) (Spanish) VICE PRESIDENT AND ECONOMY MINISTER PEDRO SOLBES, SAYING " Is this the first one but not the last one? I repeat to you what I said before, the saving banks are solvent, like the financial system is also. I feel pretty relaxed about the savings banks. Are they totally immune in the long term? If we keep having the liquidity problems we are seeing now I don't think anyone can say that" PHOTOGRAPHER AT NEWS CONFERENCE (SOUNDBITE) (Spanish) VICE PRESIDENT MARIA TERESA FERNANDEZ DE LA VEGA, SAYING "I want to transmit to all the spanish citizens a message of tranquility, and very specially for those who have their savings in Caja Castilla La Mancha, little savers, enterprises, providers or creditors. With this decision, Bank of Spain and Spanish Government guarantee their savings and their deposits" VICE PRESIDENT AND ECONOMY MINISTER PEDRO SOLBES LEAVING PRESS CONFERENCE ROOM
- Embargoed: 14th April 2009 13:00
- Location: Spain
- Country: Spain
- Topics: Finance
- Reuters ID: LVA1CG5BS0ZWVC7MMCPD08OO836A
- Story Text: The Bank of Spain, which will take over the running of CCM, will provide funds to help the bank backed by up to 9 billion euros ($12.06 billion) in government guarantees, Economy Minister Pedro Solbes told a news conference, adding that he hoped the final aid bill would be a fraction of that.
"The Spanish financial system is enormously solid," Solbes said, calling CCM's problems an isolated liquidity problem and promising that the bank would meet all its obligations to creditors and depositors.
But he refused to guarantee a trouble-free future for Spain's banks if the world financial crisis persists, particularly its regional savings banks that are heavily exposed to property developers struggling during a deep recession.
"I want to transmit to all the spanish citizens a message of tranquility, and very specially for those who have their savings in Caja Castilla La Mancha, little savers, enterprises, providers or creditors. With this decision, Bank of Spain and Spanish Government guarantee their savings and their deposits", said Vice President of the bank Maria Teresa.
The latest bad financial news comes as financial markets await the outcome of Thursday's meeting of G20 leaders in London to address the economic and financial crisis.
The Spanish government has already said it would guarantee up to 100 billion euros in new bank debt to assist institutions with liquidity problems.
But until now, Spain's government had been able to boast that its banking system had avoided any bank, due to regulations that prevented them from investing in complex mortgage-backed securities. But many banks are highly exposed to a property market that is rapidly collapsing, pushing up their non-performing loans.
Unlisted savings banks with close links to regional governments, like CCM, have long been spoken of as being most likely to succumb to trouble.
The government had first hoped that CCM, which is heavily exposed to property developers in its central Spanish region, would be able to solve its problems via a merger with Andalusia-based Unicaja, together with help from the Deposit Guarantee Fund, Solbes said.
The Bank of Spain will start by seeing if it can sort out CCM's problems with an initial injection of 2 billion to 3 billion euros, he said.
The Bank of Spain decided to replace CCM's board on Saturday, in a decision not made public until Sunday, when the bank's chairman was summoned to the Bank of Spain, officials said.
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