The European Commission approved a Spanish program to bolster the capital of some of the country’s banks and said lenders receiving aid won’t be able to pay dividends.
The program is for banks requiring interim state support, before raising private funds in the medium term. It can also be used for lenders with shortfalls that jeopardize their license or financial stability, the Commission said in Brussels today. Conditions for receiving the funds include bans on dividend payments and coupons for hybrid capital instruments, it said.
The recapitalization “is the first stepping stone” for Spain to fulfill conditions it has agreed on in exchange for getting euro-area aid, Joaquin Almunia, the European Union’s antitrust chief, said in an e-mailed statement. The measures approved today will run until the end of 2012.
Spain has agreed to a European bailout of its banks of as much as 100 billion euros ($121 billion) and the final size of that aid package will be decided after stress test results due in September. The four banks, including Bankia, that are already under state control will receive European funds “very quickly,” Economy Minister Luis de Guindos said on July 23.
“The Spanish financial sector will be rebuilt on a healthier basis,” Almunia said. “This is a key precondition for sustainable growth in Spain.”
In a separate decision, the Commission approved aid to support the sale of UNNIM Banc SA’s banking activities to Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain’s second-biggest lender. The aid will be used for restructuring at UNNIM Banc.
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