The entities that merge will not have to commit to giving loan to families and SMEs
- Those banks or savings banks that merge in the coming months will only have the “quantified objective” of which they will try to give loan in the next three years.
- The Royal Decree Law of the Sanitation of the Financial Sector establishes it this way.
- During these three years of margin the entities will have to develop a divestment plan for real estate assets.
The financial entities that participate in merger processes will no longer have the explicit commitment to grant more loan to families and SMEs, but simply a “quantified objective” that they will try to do in the next three years.
This is reflected in the Royal Decree Law on Sanitation of the Financial Sector published this Saturday in the Official State Gazette (BOE).
This week, the Economy Minister, Luis de Guindos, explained at a press conference that the entities embarking on new merger processes would be one year older , until 2013, to clean up their exposure to brick.
In principle, Economía wanted the entities to commit to grant loan from the start. This extension was subject to a series of conditions , such as that the entities would have a “commitment” to increase loan to families and SMEs, and in fact, as well it was collected in one of the last drafts that Economía handled.
This commitment, perhaps due to the warnings of the sector that there is still no solvent demand, has now been reduced to the setting of objectives for the next three years, during which the merging entities will have to develop a divestment plan for real estate assets.
Financial sources have explained that in this way the entities are also encouraged to part with their property portfolio at lower prices, but also point out that it would be enough for the banks to create real estate to comply with this requirement.
In any case, the great requirement of the Government to grant a one-year extension in the real estate risk remediation remains that the integration of entities increases the balance of the major at least 20%, except in exceptional cases, where it would be enough to I did more than 10%.
An exception that, for example, may benefit Bankia if it presents the best offer at the Unnim auction, although De Guindos stressed at a press conference that the regulation is not designed for concrete solutions and the group presided by Rodrigo Rato hopes to achieve its sanitation in a single year.
Mergers, not alliances
So things, what is clear is that they will have more time to reinforce the provisions to cover their exposure to brick entities that announced merger processes since September 1 or those who do before the next May 31.
Although as a novelty, the royal decree clarifies that this last date will not be required in the integrations of all those entities controlled by the State: Unnim, Banco de Valencia, CatalunyaCaixa or NovaGalicia.
All mergers must conclude before the end of 2012 and will allow for the charging of part of the additional write-off against reserves, with the consequent relief for the income statement.
Of course, the integrations have to be mergers in the strict sense and not alliances under an Institutional Protection System, a formula that only loan cooperatives, mostly rural banks, are allowed.
On the other hand, the Bank of Spain has called this Saturday to financial institutions to a technical meeting in which the Director of Regulation, José María Roldán, will explain the details of the reform.