Caixabank makes provision anticipating Repsol deal with Argentina

Fri Jan 31, 2014 11:17am EST

Related Topics

* 184 million euro writedown against potential YPF deal

* Analysts say move may put pressure on Repsol to do a deal

* Caixabank shares up 1.1 percent, Repsol down 1.3 percent

By Andrés González

BARCELONA, Jan 31 (Reuters) - Spain's Caixabank has written down the value of its stake in Repsol by 184 million euros ($250 million) in anticaption the oil firm will reach a compensation deal with Argentina over the seizure of its stake in energy firm YPF.

Repsol, whose largest shareholder is Caixabank with 12 percent, is negotiating a $5 billion settlement with Argentina over the 2012 expropriation of its majority stake in YPF.

Repsol had initially demanded $10 billion.

Barcelona-based Caixabank, owned by powerful Catalan financial group La Caixa, announced the writedown alongside its 2013 results on Friday, in a move some analysts said could put pressure on Repsol to reach a deal with Argentina.

The two parties began negotiations in December but talks have stuttered due to Repsol's demands that the compensation be backed with guarantees, a challenge for Argentina, which cannot access international debt markets after a 2002 sovereign default and is now facing a currency crisis.

However, some shareholders - particularly Repsol's third largest shareholder Pemex of Mexico - and politicians are keen for Repsol to reach a deal and close a tense chapter in bilateral ties between the two countries.

"We thought it was prudent ... to make an estimate in our results to account for a possible agreement that Repsol could reach with Argentina in the coming weeks," Caixabank Chairman Isidro Faine said at a news conference.

The bank said it could adjust the value of the writedown if Repsol came out with a substantially different estimate when it publishes 2013 results on Feb. 26.

Earlier, Caixabank reported a jump in 2013 net profit, thanks to positive trends in net income revenue, joining a tentative Spanish banking recovery seen in other leading lenders BBVA and Santander.

But analysts highlighted the Repsol writedown as one of the most negative aspects of the results, and JP Morgan said the loss could accelerate the sale of Caixabank's equity stakes.

Caixabank has been one of the most powerful shareholders of major Spanish firms, with big stakes in utility Gas Natural Fenosa, infrastructure firm Abertis and Telefonica, in addition to its Repsol holding.

It and other lenders are under pressure to end a long history as shareholders of listed companies in order to meet stricter international solvency rules ahead of a Europe-wide review of banks' assets this year.

In November, Caixabank raised 594 million euros from bonds that could be exchanged into part of its stake in Repsol in what some analysts viewed as the first step to selling down its full stake.

Separately, Repsol shareholder Pemex has opened the door to selling its 9 percent stake after criticising the oil firm's chairman Antonio Brufau, a move that triggered media speculation of broader discontent on Repsol's board and the possible exit of Brufau.

Caixabank's Faine played down tensions, telling reporters in Barcelona that his "stance is to support the chairman".

Repsol's shares were down 1.3 percent at 17.385 euros at 1610 GMT, tracking heavy losses on Spain's blue chip index , while Caixabank was one of the few gainers, up 1.1 percent at 4.535 euros.

($1 = 0.7373 euros) (Additional reporting and writing by Tracy Rucinski; Editing by Mark Potter)

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