* Takes majority stake in BMN
* Spain pressured to inject capital rather than lend
* Spain's top lenders invest in bad bank, BBVA absent
(Recasts lead, adds details on BMN bailout, bad bank
By Sonya Dowsett and Jesús Aguado
MADRID, Dec 13 The Spanish government is taking
over another lender as its clean-up of the troubled financial
sector gathers pace and healthier banks cough up funds to purge
the system of toxic real estate assets.
The government said on Thursday it had secured the private
investment it needed to get its 'bad bank' going, with most of
the capital coming from the country's top lenders, except for
The asset management company, known by its Spanish acronym
Sareb, will house rotten real estate loans and properties from
Spain's most ailing lenders, including four nationalised banks
that need 37 billion euros ($48.25 billion) in European aid.
At the same time, Spain's government is in the process of
taking over more banks or taking minority stakes in small
lenders, as many struggle to find the capital they need to cope
with their real estate woes and an economic downturn.
Spain appealed to Europe this year for help for banks hit by
the 2008 collapse of a long property boom, but the country
remains in the eye of the euro zone debt storm and Prime
Minister Mariano Rajoy is considering asking for a bailout for
public finances as well.
The government is taking a stake of over 50 percent in
small, unlisted lender Banco Mare Nostrum (BMN), a BMN spokesman
said on Thursday. The bank was long seen as one of the next in
line for help.
The operation is the eighth state take-over of a bank since
Spain's financial crisis began in 2008.
BMN, which has total assets close to 70 billion euros, had
originally wanted a capital boost with temporary state aid via
convertible bonds, handing the government a minority stake.
"We don't know the exact amount yet but it will easily be
more than 50 percent and it will be a direct capital injection,"
the spokesman said.
Spain has came under pressure from Europe to draw a line
under its banking turmoil quickly and decisively, and has
dropped options such as state loans to lenders.
"There was big battle between Europe and the Bank of Spain
to decide what form the capital injections could take," a source
with knowledge of the rescue negotiations said. "That's the
price of the rescue -- that the Bank of Spain and the Economy
Ministry are no longer in charge."
Spain had already earmarked some 1.5 billion euros in extra
capital needs for four small Spanish banks -- BMN, CEISS, Caja 3
and Liberbank. An audit of the banking system in September
showed they needed 6.2 billion euros, but Spain estimates that
number will fall when they transfer assets to Sareb.
MORE BANKS IN STATE'S SIGHTS
CEISS -- otherwise known as Caja Espana-Caja Duero and which
is in the process of merging with another lender, Unicaja -- is
also likely to need extra state aid on top of existing loans.
But it is still unclear whether the government will take a
majority stake, a source familiar with the matter said.
Spain's biggest, healthier lenders are also participating in
The likes of Santander will be putting in most of
the private capital needed by Sareb, the government said, adding
that a first capital injection had already taken place.
The bad bank will have an initial capital base of 3.8
billion euros and will eventually reach 5.0 billion, of which 25
percent is equity and the remainder subordinated debt, the
economy ministry said.
About 44 billion euros of troubled property assets are due
to be transferred to Sareb by year-end and a second capital
injection, from yet more Spanish banks and insurers, will go
ahead in the next few days, Spain's government added.
Spain needed private investors to provide at least half of
that capital to reduce the burden on state finances. It had been
hoping to attract foreign funds as equity investors too, but
that is unlikely to happen until at least February or March next
year, sources told Reuters last week. [IDL:nL5E8N3HSH]
Santander's initial investment in the bad bank will total
656 million euros and Caixabank's will be 472 million
euros. Sabadell and Popular between themselves are
putting in 492 million euros in start-up capital, and smaller
Kutxabank is providing 100 million euros.
Some firms with international parent groups but big
operations in Spain will also contribute token amounts. French
insurer Axa's Spanish operation said it would provide 10 million
euros while Deutsche Bank will put in 15 million.
Spain struggled to get some banks to contribute but others
like Caixabank and Popular have said they will invest in the
start-up capital of the bad bank and put in more next year.
($1 = 0.7669 euros)
(Additional reporting by Carlos Ruano; Writing by Sarah White;
Editing by Tracy Rucinski and David Cowell)