(Corrects to clarify offer price could be cut "by" and not "to"
267 million euros in paragraph 4)
By Jesús Aguado
MADRID, July 21 Spain will sell Catalunya Banc,
one of the last lenders still in state hands after the financial
crisis, to the country's second-biggest bank BBVA for just under
1.2 billion euros ($1.6 billion), said bank restructuring fund
FROB on Monday.
The government had failed twice to offload the bank in
previous auctions, even after granting the Barcelona-based
lender 12 billion euros ($16.23 billion) in aid to rebuild its
capital and cleansing it of its soured real estate loans.
This time, Catalunya Banc, one of several banks rescued in
the aftermath of a 2008 property market collapse, was slimmed
down further before the disposal. Last week it sold a bumper
6.4-billion-euro portfolio of mortgages, most of which were
problematic, to U.S. private equity firm Blackstone, in a
transaction backed by more state aid.
BBVA said late on Monday, however, that it would cut its
offer by 267 million euros if by the close of the deal -
expected by the first quarter of next year - it did not have
clarity on how Catalunya Banc's so-called deferred tax assets
will be treated.
Spanish banks have chalked up billions of euros of such tax
assets, usually incurred when they make losses, and the
government recently allowed for some of these to be turned into
state-backed tax credits that can still be counted towards their
capital under stricter international rules.
The purchase of the Barcelona-based lender is the latest for
BBVA in the northern Spanish region of Catalonia after the real
estate market collapse that felled many smaller rivals and
The Spanish government was forced to ask Europe for 41.3
billion euros of aid in 2012 to help the weakest, and after
Bankia, which is still majority-owned by the state, Catalunya
Banc needed the most money.
BBVA had bought Catalonia's Unnim for one euro in 2012. This
time it beat rivals Santander and Caixabank, which had also
submitted bids last week to buy Catalunya Banc, sources familiar
with the process had said.
BBVA said it expected over 1.2 billion euros of synergies
from the acquisition, which will contribute positively to its
earnings from 2016. It added it did not need to raise capital to
fund the deal, which would knock about 0.55 percentage points
off its capital ratio. That stood at 10.8 percent in March.
While Catalunya Banc's soured loans had put buyers off in
previous auctions - potential bidders had balked at buying it
without further state aid - the wealthy region of Catalonia is
an attractive market for Spanish banks.
This sale was also seen as one of the last opportunities for
healthier lenders to pick up some of the spoils of the crisis at
a bargain price, and grow further at a time when many are
struggling to ramp up earnings.
Most of BBVA's revenue comes from overseas markets such as
Latin America, but like top rival Santander it is also betting
on a recovery at home as Spain emerges from a deep recession.
Catalunya Banc, about 60 percent owned by FROB while another
33 percent sits with the country's deposit guarantee fund, has
about 63 billion euros of assets and just over 4,500 employees.
Spain still has a majority stake in small Banco Mare Nostrum
(BMN), which has said it will start working on a stock market
flotation next year. The state also started selling down its
Bankia holding earlier this year, turning a small profit by
placing a 7.5 percent stake in the market.
Aside from the Bankia sale, the government is unlikely to
recover much of the money it plugged into ailing banks.
The FROB, the vehicle that manages the state's holdings in
banks, said in a statement that the deal with BBVA did not
include any state-funded protection against further losses on
assets - a scheme it had offered buyers of some other bailed-out
But it did say it included some guarantees, without
disclosing how much these amounted to.
A source at FROB last week said these could cover any
penalties for breaking insurance contracts that Catalunya Banc
might incur as part of an acquisition. They would also likely
cover any compensation Catalunya Banc might have to pay out to
customers over the mis-selling of securities.
($1 = 0.7395 Euros)
(Writing by Sarah White, editing by Julien Toyer, David Evans
and Gunna Dickson)