State aid for Spanish banks approved
By Eric van Puyvelde | Wednesday 25 July 2012
On 25 July, the European Commission concluded that restructuring aid granted by Spain – a guarantee in the form of a loss protection – to savings bank UNNIM Banc SAU (UNNIM) in the context of the sale of its banking activities to Banco Bilbao Vizcaya Argentaria (BBVA) is in line with EU state aid rules. The Commission found that UNNIM’s restructuring plan adequately addresses the structural problems that led to the bailout of the bank, whilst avoiding undue distortions of competition. Through a competitive tender process, BBVA acquired UNNIM, on 7 March. UNNIM will be integrated into BBVA and will cease to exist as an independent bank. UNNIM’s branch network will be significantly restructured and integrated within BBVA’s branch network.
On the same day, the Commission approved, until 31 December 2012, a new Spanish scheme aimed at strengthening the capital basis of credit institutions. The scheme sets the conditions under which the Fund for Orderly Bank Restructuring (FROB) will strengthen the own resources of credit institutions which, after the stress tests, would show a capital shortfall that they intend to cover with private sector resources in the mid-term but need support from the state during an interim period. The stress test are currently being conducted under the ‘Memorandum of understanding on financial sector policy conditionality’. In addition, the scheme serves as a backstop facility for banks with urgent capital needs materialising before the stress test is completed. The Commission found the scheme to be in line with its rules on state support to banks during the crisis, because it is limited in time and scope.