The Bank of Spain has today announced their intention to sell Unnim, a loss-making savings bank, to BBVA for the princely sum of one euro.
Unnim, created with the merging of three smaller savings banks, was taken over by the central bank in September 2010 after failing to meet minimum-capital requirements.
It is one of five banks taken over by the central bank following the collapse of the property market in 2008 which left much of the country’s banks with huge debts.
The bank has experienced losses of 953 million euros which will be absorbed by Spain’s bank deposit guarantee fund before being sold to BBVA, the second-biggest bank in Spain, in terms of assets. The fund will also assume 80% of Unnim’s future losses for a period of 10 years.
During the first nine months of 2011, Unnim notched up losses of more than 107 million euros.
BBVA president Francisco Gonzalez thinks the deal is good for both banks.
“This operation is good for BBVA and it is good for Unnim,” he said, adding that it will “help strengthen the Spanish financial system”.
Bids for the struggling bank were accepted until February 20th, with BBVA being picked over bids from Spain’s largest bank Santander, Banco Popular and Ibercaja.
In terms of assets the merger will make BBVA comparable with Santander. At the end of 2011 BBVA had assets, in Spain, worth 309.9 billion euros, while Santander recorded assets totalling 337.8 billion euros.
The central bank intends to sell off several bailed-out banks during 2012, including Caixa Catalunya and Banco de Valencia.