SPAIN’S TROUBLED savings and loans banks will be able to sell up to half of their equity to private investors under a package of sweeping reforms aimed at bolstering the institutions that have been the focus of recent investor worries over the financial health of the country.
The reforms, to be approved today, will also seek to curb political meddling in the institutions – cajas – by restricting the number of elected public officials allowed on their management and supervisory boards.
José Luis Rodríguez Zapatero, the Spanish prime minister, described the shake-up as the “most important in the history of the Spanish banking system”.
“This is a fundamental reform of great depth,” he said, while promising to make the cajas’ governance “more professional and democratic”.
The reforms would open up the equity of cajas to private investors. Under current rules, cajas are restricted to selling non-voting securities known as “participative quotas”, as well as normal shares in listed industrial holding subsidiaries.
The Spanish prime minister, who has come under immense pressure this year to speed up economic reforms, said the rules would “strongly limit” the number of elected officials named to the boards.
While the banks are essentially public institutions, politically motivated lending to civil works or well-connected property developers and other firms has often clashed with commercial risk criteria. The cajas account for about half the assets and deposits in the Spanish financial sector. – (Copyright The Financial Times Limited 2010)
