SMALL SPANISH BANKS ATTRACT FOREIGN BUYERS

Small Spanish Banks Attract Foreign Buyers

Small Spanish Banks Attract Foreign Buyers

Spain has long been a target market for foreign banks looking to grow their business in mainland Europe.

Over the last two decades, international banks like Deutsche Bank, Citibank and Barclays expanded their Spanish network organically, taking advantage of the credit boom.

And in 2003, Barclays bought mid-sized entity Banco Zaragozano, merging it with its Spanish subsidiary to become the country´s leading foreign banking operator.

Ten years later, acquisition opportunities are re-emerging for overseas institutions as the Spanish government pushes ahead with the financial sector´s restructuring after the recent property bust and the 2012 EU-funded bailout of several key lenders.

A “BAD BANK” CAN BE A GOOD THING

As part of the banking sector shake-up, Spain plans to purge around 180 billion euros of bad property-related assets which remain on lenders balance sheets. These assets will be transferred to a “bad bank” known by its Spanish acronym SAREB.

Foreign investors are likely to move in when there is a need for a cash injection after these troubled assets are removed.

Many of Spain´s regional savings banks, now transformed into banks, need to focus on rebuilding deposits after years of diversifying away from their core business. So there is room to grow!

Another M&A opportunity could present itself when four banks, currently controlled by Spain´s bank-bailout fund, come under the hammer.

The FROB fund plans to sell these assets to recoup the cash it has injected into the financial system since 2010.

FOCUSING ON MARKET SHARE

One of the banks in the FROB´s portfolio is Novagalicia Banco (NGB), born of the merger between Caixanova and Caixagalicia, two small savings banks based in Galicia, north-west Spain.

NGB controls 42 percent of the Galician market, making it the bank with the largest presence in any of Spain´s 17 autonomous regions. So it´s an attractive bet for a foreign bank looking to grab a sizeable share of the domestic market in one fell swoop.

But NGB is not content to sit on its local laurels and is now focusing on developing its business outside Galicia and the neighbouring regions of Asturias and Leon.

To this end, it has created a totally new brand, EVO Bank, with headquarters in Madrid. EVO Bank´s network extends to Spain´s top fifty cities. It combines on-line banking with traditional personalised service.

Earlier this week, Spanish Economy Minister Luis de Guindos said there have been expressions of interest from potential buyers for NGB as well as for another nationalised bank Catalunya Caixa.

So would you consider buying Spanish bank assets? Contact Argali Abogados for more information!

Leave a Reply