In its first rescue of the current financial crisis, Spain’s central bank took over the Caja de Ahorros Castilla La Mancha (CCM) and prepared to inject emergency cash to bolster the struggling savings bank’s liquidity.
AFP - Spain's central bank took over a struggling savings bank on Sunday and prepared to pour in emergency cash, its first rescue in the financial crisis.
The central bank said in a statement that it placed the Caja de Ahorros Castilla La Mancha (CCM) under special administration, and the government met to discuss a cash injection of up to nine billion euros (12 billion euros).
CCM "faces problems of liquidity that can only be resolved through financing from the Bank of Spain," Economy Minister Pedro Solbes told reporters after an urgent government meeting.
"It is not an injection of public capital or a nationalisation," but a measure to get liquidity from the central bank flowing to buoy up the regional savings bank, he said.
Solbes and the deputy head of the government Maria Teresa Fernandez de la Vega said the central bank and the government would guarantee customers' savings. Solbes said no other banks were at risk of needing public support.
The Spanish banking sector had so far been spared much of the turmoil that has hit banks in other parts of the world. No bank had had to be recapitalised and state aid had been limited to loan guarantees or some asset purchases.
It was the first time the central bank had stepped in to take over a struggling lender since it took control of Banco Espanol de Credito in 1993.
But Spain's small regional savings banks, which specialise in looking after customers' deposits and funding mortgages, have been hit hard by the busting of the country's decade-long construction boom.
The struggling Caja savings bank in the Castilla La Mancha region had been in talks on a possible takeover by another regional bank, Unicaja.
Spanish media reported on March 19 that the government was preparing a rescue plan for the banking sector that would see the state take a stake in some banks while allowing others to go bust.
Date created : 2009-03-30