European Commission - Press release
State aid: Commission approves restructuring aid for the sale of Spanish Banco CAM to Banco Sabadell
Brussels, 30 May 2012 – The European Commission has concluded that restructuring aid granted by Spain to Banco CAM in the context of the sale of its banking activities to Banco Sabadell was in line with EU state aid rules. The Commission found that the restructuring plan adequately addresses the problems that led to the bail-out of the bank in July 2011. The disappearance of Banco CAM from the market as an independent entity, the sale of its banking business to Banco Sabadell and the deep restructuring foreseen should ensure long-term viability without continued state support, whilst avoiding undue distortions of competition.
In December 2011, the Spanish bank Banco Sabadell agreed to buy the banking business of Banco CAM after an open and competitive tender. Banco CAM will cease to exist as an independent entity, as Banco Sabadell is intending to merge Banco CAM to Banco Sabadell. Before the sale becomes effective, Banco CAM will cancel a €3 billion rescue liquidity line that it received through the Spanish bank restructuring fund FROB.
As part of the sale, the Spanish Deposit Guarantee Fund (DGF) and FROB granted three support measures to the banking business bought by Banco Sabadell:
(i) a guarantee for ten years on losses stemming from a €24.6 billion loan portfolio. This guarantee covers 80% of the losses non covered by Banco CAM’s provisions of €3,9 billion. The Commission estimates that this measure contains between €7.2 and €8.2 billion of state aid;
(ii) a capital injection of €2.4 billion, on top of the €2.8 billion rescue recapitalisation already received by Banco CAM from FROB;
(iii) a contingent grant of up to €0.7 billion, which would be triggered only if, after the acquisition by Banco Sabadell, Banco CAM could no longer benefit from the accumulated deferred tax assets as of 31 December 2011.
The Commission's investigation concluded that the complete exit of Banco CAM from the market as an independent entity, the sale of its banking business in an open and competitive tender and the deep restructuring foreseen for the business within Banco Sabadell, will ensure the viability of the sold business. These factors also limit the distortion of competition caused by the significant amount of aid compared to the size of the banking business, which had a total balance sheet of €70 billion in December 2011. Banco CAM had a limited market presence in the Spanish banking market, where it represented around 2.8% of total assets.
Banco CAM holds the banking activities previously held by the Spanish saving bank Caja de Ahorros del Mediterráneo ("CAM"). Banco CAM provides retail banking services mainly in the regions of Valencia, Murcia and Balearic Islands. Once the sale of the banking activities becomes effective, CAM will be transformed into a special foundation, in order to keep pursuing charitable objectives, with no link to the business activities of Banco CAM or Banco Sabadell.
Banco CAM came into financial difficulties in particular due to its significant exposure to real estate-related transactions. In July 2011, the Bank of Spain placed it under the control of the Fondo de Reestructuración Ordenada Bancaria (FROB), the Spanish bank restructuring scheme, approved by the Commission (see IP/10/70 and IP/10/997).
FROB provided Banco CAM with two temporary rescue measures: a capital injection of €2.8 billion, to meet regulatory capital requirements, and a liquidity line of €3 billion to meet its estimated liquidity needs until the completion of the sale process.
The non-confidential version of the decision will be made available under the case number SA 34255 (N/2012) in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.