MADRID, Dec 13 (Reuters) - Bidders for Spain’s nationalised NCG Banco could benefit from up to 2.3 billion euros ($3.16 billion) in tax credits that count as capital if they buy the bank, three banking sources said, though most may still ask for extra state aid to ease the sale.
Spain’s government is hoping to attract binding bids on Monday for Galicia-based NCG, in a key test of its ability to dispose of bailed-out lenders. The auction of another state-rescued bank failed earlier this year.
But potential bidders, including top Spanish banks and some foreign funds, have resisted taking on NCG Banco without any state protection against future losses it might make, or some other sweeteners.
Losses on soured real estate and loans left some Spanish banks needing a 41 billion-euro rescue from Europe. Including European aid and other state help from Spain, NCG Banco got 9 billion euros in bailout funds.
Spain’s government has been trying to resists demands for more aid to sell NCG, however. It hopes perks like the tax credits may ease those pressure, although that is unlikely, the banking sources familiar with the auction said.
Spain recently tweaked tax laws to allow banks to transform part of their so-called deferred tax assets into state-backed tax credits. Then they can still count them as core capital under new global banking rules that come into effect in 2014.
It was unclear until now what that meant in terms of capital for NCG Banco. The bank has 4.6 billion euros of deferred tax assets overall, often incurred because of losses. Spain’s bank restructuring fund FROB, which owns NCG, declined to comment on the 2.3 billion-euro figure.
Bidders may now adjust their demands for state aid accordingly, as they ask for asset-protection schemes to cover varying amounts of NCG’s loan book.
“Everyone really has the same problems with NCG Banco,” said one banking source. Besides the health of NCG’s loans, those include compensation that may be needed for bank clients who believe they were wrongly sold preference shares.
“In the end, it will depend on who will be a bit more aggressive, on who is prepared to take a slightly greater risk,” the source said.
Spain’s three biggest banks, Santander, BBVA and Caixabank, are expected to lodge bids on Monday. Venezuela’s Banesco, which has already bought a small bank in Spain, is also circling NCG. So is U.S. financial- services firm Guggenheim Partner. ($1 = 0.7271 euros) (Editing by Julien Toyer)