Spain savings banks in consolidation talks-report
MADRID, Oct 21 (Reuters) - A group of Spanish savings banks are in talks to consolidate operations by pooling resources and investments, regional newspaper El Norte de Castilla reported in its online edition, citing sources close to talks.
The six banks in the Castilla y Leon region include Caja Espana, Caja Duero, Caja de Burgos, Cajacirculo, Caja Segovia and Caja de Avila, El Norte de Castilla reported on Tuesday.
The banks will keep their independent regional identities after the merger process, the newspaper said.
A spokesman for Caja Burgos denied that there had been talks amongst the savings banks. None of the other bank could be reached for comment. "Cajas" -- unlisted banks controlled by regional governments -- have been hit heavily by the economic downturn and the credit crunch which has led to a sharp rise in defaults and has paralysed new lending and led to expectations of sector consolidation.
Some 70 percent of lending by the cajas at the end of the second quarter was to the property and construction sector, which has slumped after over a decade of strong growth.
The savings banks cannot be bought or sold and their legal structure makes them more comparable to non-profit foundations than to commercial entities.
However they may sell assets or consolidate by merging with other savings banks under current Spanish legislation. (Reporting by Paul Day and Jesus Aguado; Editing by Paul Bolding)
