By Euro Weekly News Media • 26 September 2011 • 9:31
CAM has used €500 million of its Bank of Spain cash injection as clients desert the ailing bank.
One of the government’s first moves on stepping in and taking over last July was to open a €3,000 million credit line so that the Alicante-based bank would not be stifled by mass withdrawals.
But since the beginning of this year, clients’ deposits in Spain’s fourth-largest savings bank dropped by thousands of millions of euros. Analysts suspect that more injections could be needed in coming weeks, because nothing seems capable of halting the constant drip of withdrawals.
CAM is – or was – a household name in the Valencia region but with registered losses of €1,136 million in the first six months of the year, critics say it does not have a lot in its favour at present.
All banks are currently fighting for deposits from clients, as the wholesale credit markets’ cutback forces them to look for money from other sources.
They, too, must settle debts to remain solvent and, circling CAM like watchful predators, they are trying to tempt clients away with enticing offers.
CAM is fighting back, offering interest of 4.45 per cent for two-year deposits or 3 per cent for one year. But it has further operating problems, with staff laid off and branches closed as it is slimmed down.
Now comes the news that €500 million of CAM’s credit line was swallowed up between its July 23 takeover and August 31 and it has a further €979 million to pay out before the end of the year.
Real trouble for CAM could come next year when it has to repay €5,400 million but the Bank of Spain, which hopes to sell CAM, has – in best bargaining fashion – made it clear that it is prepared to “study formulas” with potential buyers.
Time might be money but in CAM’s instance, buying time is worth even more.
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