This is a note from Banco Santander analysts about the current state of what used to be their competitors, the savings banks. It is a good way to summarise where they are now and what they look like [emphasis is ours]:
“The Bank of Spain (BoS) last Friday considered the process of re-capitalisation of the country’s financial system as completed. Thus, it has met the stringent capital requirements imposed by law in February 2011. This is positive news for the whole sector.
Let’s be reminded that the new law ordered Spanish banks to reach a core capital ratio of at least 8%, or 10% in the event that an entity had not placed on the market at least 20% of its capital and its wholesale funding represented more than 20% of the total.
“Five were the entities that couldn’t comply and, as it was expected, this has required the following decisions:
“one; the injection of public capital in three of them –Novacaixagalicia (Baa3 n / BB + e), CatalunyaCaixa (Ba1 n) and UNIMM (BB + e). These cajas have received €2.5 billion of public capital, €1.7billion and €600Mn, respectively. These figures are in line with expectations and now their core capital stands at between 10% and 10.8%. The surprise has been how conservative the valuations applied were (PBV of 0.12x, 0.09x and 0x, respectively), below the 0.20x PBV expected by the market, and also lower than the pre-IPO PBV of Bankia and Banca Cívica’s, which stood at around 0.25x. As a result, the Spanish Bank Restructuring Fund’s (FROB in Spanish) capital participation in these institutions has increased to 93%, 90% and 100%, respectively;
“and two; for Group BMN (BBB + e) and Liberbank (Ba1 n / BBB + e), in an advanced process to re-capitalise with private funds, the BoS has granted a 25-day extension to complete the process (less than the extension of up to 3 months allowed by law, and 6 months in the case of IPO).
“On balance, the BoS’s estimates for the total cost of recapitalisation resulting from the application of the new rules are €13.4 billion (€7.6 billion of public capital and €5.8 billion of private capital), below their initial estimate of €16 billion.”
Adding the amounts injected in 2010 (€10.1 billion) to what was spent between July (in CAM) and September (in Novacaixagalicia, CatalunyaCaixa and UNIMM), the FROB has injected a total of €17.7 billion of its funds to re-capitalise the sector.
“In this long process, the savings banks sector has been restructured from 45 entities to 15, almost all of them transformed into banks (98% of the assets). There have been €105bn in writedowns, and a reduction in branches and staff of 17%.”
And none of them holds any Greek debt, by the way.