Bank of Spain on Wednesday said that four lenders that were supposed to merge into Banco Base will have to present new recapitalization strategies "immediately,"

Bank of Spain on Wednesday said that four lenders that were supposed to merge into Banco Base will have to present new recapitalization strategies "immediately," after a planned merger fell apart at the last minute.

The general assemblies of three out of the four lenders late Wednesday voted against a plan to transfer their assets into Banco Base at the terms agreed on in February, effectively terminating the merger.

The failure is a big setback to the country's plans to clean up an industry suffering from the collapse of a decade-long housing boom.

The Bank of Spain said in a statement that the state's bank bailout fund, the FROB, would inject the necessary capital into the lenders that fail to raise sufficient capital privately.

The FROB in December last year agreed to inject EUR1.49 billion into Banco Base in return for preferred stock, but the Bank of Spain said that this injection hadn't yet been completed.

It reiterated that all the savings banks that are short on capital must have their recapitalization plans approved by the central bank before April 28.

The planned members of Banco Base were Cajastur, Caja Cantabria, Caja Extremadura, and Caja de Ahorros del Mediterraneo (CAM.MC), or CAM.

CAM, the biggest but also the weakest of the four, was the only one to approve the transfer of assets into Banco Base.

You Might Also Like :