Sareb increases its capital in order to introduce private investors

The Management Company for Assets Arising from the Banking Sector Reorganisation (Sareb), has carried out a capital increase in order to introduce the main partners (Santander, Caixabank, Popular, Sabadell and Kutxabank) in to the shareholding. This provision, together with the sum from the Fund for Orderly Bank Restructuring (FROB) and the money to come in over the next few days, will cover about three quarters of Sareb’s total share capital. In an initial phase the assets of nationalised financial institutions will be transferred (BFA-Bankia, Catalunya Caixa, Novagalicia and Banco de Valencia) to Sareb.

To date, the list of founding shareholders and their stakes in the capital are as follows (in € million):

his transfer will be completed over the next few weeks with the issue and underwriting of subordinated debt by private shareholders and the FROB.

The remaining provisions, up to the total equity required (about 3.8 billion euros) for this initial phase, will be incorporated over the next few days with another capital increase and by underwriting a subordinated debt issue on the part of other shareholders and the FROB. This will be completed by 31st December. It is expected that various banks and a group of private insurance companies will join as additional shareholders.

Because of the standard legal and administrative procedures required to set up a company of this importance, not all the capital and private subordinated debt committed to it can be paid up in one go.

Virtually all of the main financial institutions and insurers in Spain will have a stake in the company. The positive response received from the sector indicates a positive and profitable roll out for Sareb, a company that will be managing assets with a value of around €59 billion.

Sareb’s Board of Directors has also been selected, which has proceeded to the formal appointment of Belén Romana as President and Walter Luis de Luna as Director General Manager. The board members are the following: Remigio Iglesias Surribas (Proprietary director – private partners), Antonio Massanell Lavilla (Proprietary director – private partners), Javier Trillo Garrigues (independent), Luis Sánchez-Merlo (independent), Belén Romana García (Proprietary director- FROB) and Walter Luis de Luna (Proprietary director – FROB).

Once the second capital increase is complete, Sareb’s Board of Directors will make the remaining appointments, bringing the total up to 15. Of these, five will be independent, in accordance with Law 9/2012, and the others will be proposed by owners in proportion to their stake. The FROB will nominate four board members.

Sareb, which was set up on 28 November, is as of today a fully-functioning body for achieving its ends. This is a decisive step in applying the commitments made in the Memorandum of Understanding resulting from the European loan to recapitalise the Spanish financial sector. Sareb is a key piece in this process, the purpose of which is to take on the property assets of financial institutions’ which received state funding, in order to clean up their balance sheets.

Before the end of this month, Sareb will finalise the purchase of the assets from the nationalised banks for an estimated figure of 44 billion euros, in line with the parameters set out in the restructuring plans approved by the European Commission on 28 November.

The transfer of assets from Group 2 will take place in 2013 and will require a new capital increase and a new issue of subordinated debt, which will be underwritten by the current shareholders and other new shareholders, who will join in the second phase.