Dec
16
Bank of Spain Deputy Governor Fernando Restoy arrives at a news conference in Madrid on Dec. 4, 2013. A sale of nationalized Spanish bank NCG Banco, a former savings bank based in the north-western region of Galicia, should be wrapped up by the end of the year, the head of Spain’s bank restructuring fund Mr. Restoy said.
Reuters
MADRID–Who should be able to buy a nationalized bank? Another lender or an investment firm?
That’s the debate raging right now in Spain as investment firms such as Guggenheim Partners LLC and J.C. Flowers Co are planning to submit bids today to buy NCG Banco SA, a nationalized lender in the northwestern region of Galicia. A similar battle played out in the U.S. after the financial crisis.
The investment firms are up against Spanish banking powerhouses Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, among others, according to people familiar with the auction.
The Spanish government has set up some extra hurdles for funds – international or domestic – that want to buy NCG Banco. They are required to set aside capital equal to 3% of the purchased entity’s risk-weighted assets, for instance – around €800 million ($1.1 billion) in the case of NCG Banco.
Some investment firms and their supporters say the Spanish government should be welcoming investment funds that less than a year ago were shunning such assets. But on the other side of the debate are those who say investment firms are after returns, and if those doesn’t materialize as expected, they’ll jump ship.
And that would leave NCG back where it started.
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