Spanish Business News

Feb. 28 (Bloomberg) -- Qatar plans to invest 300 million euros ($415 million) in Spanish savings banks as the industry prepares to raise funds to meet new capital rules.

Qatar’s Prime Minister Sheikh Hamad Bin Jasim Al-Thani also announced plans to invest in Spanish telecommunication and energy companies, Spain’s government said in statement today after a meeting in Doha. Spanish Prime Minister Jose Luis Rodriguez Zapatero gave no further details at a joint news conference , while Al-Thani said there are a “couple of possibilities” for investment and an announcement may come in the “next two weeks or 10 days.”

Spain tightened capital requirements for banks on Feb. 18 as part of its efforts to restore investor confidence and has set a September deadline for lenders to meet the new rules or risk partial nationalization. The Bank of Spain estimates the total cost won’t exceed 20 billion euros and the government, battling to reorder public finances, wants lenders to seek funds from private investors and use the state’s rescue facility, known as the FROB, only as a last resort.

The Bank of Spain is due to announce details of each lender’s capital position on March 10. The new requirement of core capital, a measure of financial strength, is 8 percent, rising to 10 percent for banks that don’t have private shareholders holding at least 20 percent and that depend on wholesale financing.

Going Public

Spain’s two biggest savings banks, La Caixa and a merged group led by Caja Madrid, have already announced plans to become listed lenders. The Caja Madrid group has created a bank and plans an initial public offering this year, while La Caixa will transfer its banking operations to its listed investment unit, Criteria CaixaCorp SA.

The FROB, which will take ordinary shares with voting rights in banks in return for providing capital, was created in 2009 with an initial 9 billion euros and the capacity to take on as much as 90 billion euros in debt. It has already committed 11.6 billion euros to back mergers between savings banks, equivalent to about 1 percent of the economy.

Source: Bloomberg Business Week