Spanish CatalunyaCaixa to seek state funds

* Savings bank seeks 1.7 bln euros from state

* Second bank to seek state funds to boost capital

* Amount is exactly what central bank says it needs

MADRID, March 24 (Reuters) – Spanish regional savings bank
CatalunyaCaixa said on Thursday it would seek 1.7 billion euros
($2.4 billion) of state funds under new government rules to
bolster banks’ capital and reassure markets on their
stability.

The amount is exactly what the Bank of Spain estimates the
Catalonian bank needs to bring its capital reserves up to tough
new government minimum requirements. [ID:nLDE72926J]

CatalunyaCaixa, which accounts for around 2.6 percent of
Spain’s banking system, is the second unlisted savings bank to
seek state capital since the government demanded in January
they find private funds or face nationalisation.

Novacaixagalicia, the fourth-largest savings bank or
“caja,” said on Wednesday it would apply for capital from the
state fund (FROB) set up to oversee the restructuring of
Spain’s regional banks, but did not specify how much it would
request.

Spain’s savings banks lent indiscriminately to property
developers during a decade-long housing boom which fizzled out
three years ago.

Questions over the value of unsold assets on their balance
sheets have led to worries of a funding gap and a potential
bailout of Spain’s financial system, similar to that of Ireland
last year.

Ratings agency Moody’s downgraded 30 Spanish banks on
Thursday, citing a combination of pressure on the country’s
sovereign debt and declining market share of smaller banks as
the financial sector consolidates. [ID:nLDE72N0B1]

CatalunyaCaixa will start looking at alternatives to
replace the government as a shareholder in the medium term,
including an employee-ownership scheme, a convertible bond
issue, private investors or a merger with other banks, it
said.

It will not seek a stock market listing in the short term,
it said.

The Bank of Spain has estimated the capital shortfall of
the banks to stand at 15 billion euros.
($1=.7109 Euro)
(Reporting by Sonya Dowsett, editing by Matthew Lewis)

Spanish CatalunyaCaixa to seek state funds