Three small Spanish banks post multi-billion euro losses

Three small Spanish banks post multi-billion euro losses

Wed, Mar 27 2013

MADRID (Reuters) – Three small Spanish banks reported multi-billion euro losses on Wednesday, showing the scale of the country’s problems with its property market.

The three banks – Banco CEISS, BMN and Caja 3 – which have all been rescued by the government, had to take big write-downs on bad property loans and assets.

Spain has forced its banks to recognize their property losses to try to clean up the sector after the country’s property boom collapsed in 2008.

Banks without a strong enough capital base, such as CEISS, BMN and Caja 3, turned to the state for support, forcing Spain to take 41 billion euros in European aid for its banking sector.

CEISS, formed from the merger of two former savings banks based in the north of Spain, reported a 2.5-billion-euro ($3.21 billion) 2012 loss after booking 3 billion euros of provisions on its real estate exposure.

BMN, made up of three other savings banks based in Mallorca and southern Murcia and Andalusia, posted a 2.4-billion-euro loss after taking writedowns of 3.7 billion euros on its property holdings.

Caja 3, also formed from the merger of three savings banks from northern Spain, reported losses of 1 billion euros after setting aside 1.6 billion euros to cover real estate risks.

The government has taken full control of four banks in total and has to decide their future. One option being examined is to group nationalized lenders in one holding company.

Spain has 65 percent of BMN and is due to list it by 2017. Caja 3 got 407 million euros of state aid and is now expected to merge with another small bank, Ibercaja, which has not received public money.

The future of CEISS, which has negative equity of 288 million euros according to the state bank rescue fund, is still unclear. The state is due to inject 604 million euros of European funds into CEISS, take control of it and later sell it.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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