The European Union executive branch has endorsed the restructuring schemes of four Spanish banks waiting for the release of bailout funds. But Banco de Valencia has to be sold immediately for a symbolic price.
The European Commission on Wednesday approved restructuring schemes for four of Spain's most troubled banks. Brussels' decision was seen as a final step for the lenders to qualify for bailout money from the European Stability Mechanism (ESM), the continent's permanent rescue fund.
"Our objective is to restore the viability of banks receiving aid so that they're able to function without public support in the future," EU Competition Commissioner Joaquin Almunia said in a statement. "Restoring a healthier financial sector is indispensable for economic recovery in Spain."
The Commission threw its weight behind the restructuring plans for BFA/Bankia, NCG Banco, Catalunya Banc and Banco de Valencia.
Winners and losers
Brussels said those lenders had a viable concept for recovery and added it expected shareholders would contribute adequately so that competition in the banking sector would not be distorted.
The plans call for the banks to drastically reduce their balance sheets by focusing on granting loans to the corporate sector and private households while completely saying good-bye to lending for real estate development.
But the European Commission warned that Banco de Valencia was in a special situation, because "its viability could not be restored on a standalone basis." The lender is to be sold to CaixaBank for the symbolic price of one euro. "The sale is lower than the cost of simply winding down the bank," Brussels commented.
hg/hc (AFP, dpa)