Merger of Banks in Spain

The Bank of Spain has ordered the four savings banks that had been poised jointly to form the new Base to provide details “immediately” of their plans following the collapse of the merger on Wednesday evening.

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Banco Base, which would have been Spain’s sixth-largest lender by assets, was the only merger not to have been by Monday’s deadline for all Spanish banks and cajas to explain how they intended to themselves if they fell short according to the central bank’s calculations.

Banco Base was to have brought together (Cam) and savings banks from Asturias, Cantabria and Extremadura.

Cam, based in Alicante and heavily exposed to the troubled Spanish housing market on the Mediterranean coast, was the largest of the four by assets but now faces an uncertain future. It will have to find a new merger partner or outside investors or accept a takeover by the state in the form of the Frob.