The Bank of Spain took control of the Caja Mediterráneo (CAM) savings bank after the markets closed on Friday, paving the way for possible nationalization. The move came after CAM's directors asked for intervention, said Economy Minister Elena Salgado.

The orderly bank restructuring fund (FROB) was expected to fire the administrators and appoint new managers, according to Bank of Spain, which added that the new institution will be renamed Banco CAM. Salgado told Efe news agency that the central bank would inject 2.8 billion euros and approve an additional 3-billion euros line of credit to assure the bank's liquidity.

"All of the measures adopted today are geared at stabilizing and guaranteeing the normal operations of the CAM Group so that it can meet its obligations to third parties," reads a Bank of Spain statement. "Account holders and creditors can now remain absolutely calm."

Earlier this month, the FROB rejected a request from the board of directors who asked for 2.8 billion euros in public funding to meet solvency requirements.

The Bank of Spain put CAM on a list of banks that were expected to ask for government funding to meet the new core capital requirement of 8 percent of risk-weighted assets, or 10 percent in the case of weaker lenders.

Bank Of Spain Offers To Cover Up To EUR20 Billion Of CAM's Future Losses - Report

Published September 18, 2011

Dow Jones Newswires

The Bank of Spain is offering to sweeten the deal for potential buyers of ailing savings bank Caja de Ahorros del Mediterraneo (CAM.MC) by covering CAM's future losses for up to EUR20 billion, which is the estimated book value of the entity's real-estate asset portfolio at risk, El Mundo reported in its Monday Internet edition.

In late July, Spain's Fund for Orderly Bank Restructuring, or FROB, which is controlled by Spain's Central Bank, took over the management of CAM and is now preparing to sell it in an auction.

Among the interested parties are Banco Santander SA (STD), Banco Bilbao Vizcaya Argentaria (BBVA), La Caixa and Basque savings banks, according to El Mundo.

Spain Willing to Pump Up to $27 Billion Into CAM,
Mundo Says

By Esteban Duarte - Sep 19, 2011 6:34 AM GMT+0100

Spain’s banks rescue fund may cover as much as 20 billion euros ($27.2 billion) of potential losses at Caja de Ahorros del Mediterraneo (CAM), El Mundo reported, citing sale documents sent to potential buyers by the nation’s central bank.

The cash injection would be through a so-called “asset protection” program, which would protect the new owner of the bank from losses due deterioration of asset value or defaults, El Mundo said.

Spain’s CAM Says More Than Half of Developer Loans in Default

By Charles Penty - Bloomberg - Sep 22, 2011 10:20 AM GMT+0100

Caja de Ahorros del Mediterraneo (CAM), a Spanish savings bank seized by the Bank of Spain, said more than half of its loans for property development were in default.

Of 12.7 billion euros ($17.2 billion) lent to developers, 6.4 billion euros were classed as doubtful, the lender said in explanatory notes to its first-half earnings published late yesterday. Another 1.3 billion euros of those loans were classed as “substandard,” the lender said.

The Bank of Spain is looking for a buyer for CAM, which was seized in July. It posted a 1.14 billion-euro first-half loss as its default ratio more than doubled to 19 percent since December.

Selling the stricken lender is a priority for the regulator as it seeks to bolster confidence in a banking industry pummeled by defaulted loans to developers. Auditors KPMG said yesterday that the bank’s viability depends on the success of a plan put together by the government’s rescue fund.

The Alicante-based lender said 5.4 percent of its 1.1 billion euros of mortgage loans to individuals were in default. Property development and business-services loans accounted for 29 percent of its loan book, the lender said.

Santander Seen As Bank Of Spain's Favorite To Buy CAM – Report

DOW JONES NEWSWIRES

Banco Santander SA (STD) is emerging as Bank of Spain's favorite candidate to buy and revive ailing savings bank Caja de Ahorros del Mediterraneo (CAM.MC), reports El Mundo in its Friday Internet edition, citing people close to the process.

Santander, Banco Bilbao Vizcaya Argentaria (BBVA), CaixaBank (CABK.MC), Banco de Sabadell SA (SAB.MC), Barclays PLC (BCS), Ibercaja and investment fund J.C. Flowers all placed non-binding bids on CAM this week, according to El Mundo.

Santander would integrate CAM into its unit Banco Espanol de Credito SA ( BTO.MC), which currently enjoys a confortable cash flow position, the paper adds.

The Bank of Spain will soon make a short list of the potential buyers, which will have to submit a binding offer on CAM by the end of October.