Blogging from the Murcia region of Spain until early June, when I return to
the Highlands of Scotland for a few months

'Fair and softly goes far' - Miguel de Cervantes

Sunday, 29 March 2009

Spain see first bank bail-out

(Please see UPDATE at end)

Spain's banking system seemed to be relatively secure, compared to some (e.g. the UK and the US), but the Spanish government has now had to bail out its first banking institution in recent times, one of the regional savings banks - Caja Castilla la Mancha (CCM) (thru Barcepundit).

The Spanish cabinet met today in emergency session to approve Treasury guarantees of upto 9bn Euros to secure the financing by Spain's central bank, Banco de España, necessary to assure against CCM's liquidity problems. According to Economy Minister Pedro Solbes, whilst the treasury guarantee is for upto 9bn Euros it requires [only] 2 to 3bn Euros for its [immediate] financing needs. The Minister explained the weekend meeting was used to take advantage of the markets being closed, rather than it being an 'emergency situation' - he sought to stress that the Spanish financial system "remains extremely strong" and that he enivisaged no other "immediate problems" in other cases, although he refused to rule out other interventions might become necessary, given the current fragile economic situation.

CCM represents slightly less than 1 per cent of assets in the Spanish financial system.

UPDATE: (Tuesday 31MAR09 11.22 RST) I have written a later post about the emerging news that Unicaja had called off merger talks with CCM, probably precipitating the rescue by the Spanish government.

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