The European Commission has approved a 2.4 billion euro capital injection for Banco Caja de Ahorros del Mediterraneo (CAM) from Spain’s bank bailout fund, along with a 10 year government guarantee to cover any future loses.
CAM was seized by Spain’s central bank last year after it’s toxic property loans wrecked it’s business. Banco Sabadell then agreed a takeover deal of CAM for one euro in December.
“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,” the commission said in a statement.
Before the deal with Sabadell becomes effective CAM must cancel a 3 billion euro liquidity line received from the bailout facility, the EU said. CAM also obtained EU permission to get as much as 700 million euros if it can’t benefit from deferred tax assets following the takeover.
As part of the process approximately 450 branches will be closed, affecting 2,200 staff, 40% of which will be in the Valencia, Murcia and Balearic regions. These closures are expected by the end of 2013.
The closures will also affect the group internationally. Sources report that Banco de Sabadell recently asked the Florida Office of Financial Regulation to approve the acquisition and subsequent closure of CAM’s international agency branch in Florida.