Spain has sold the country’s ‘failed’ Catalunya Bank for just €1.2 billion ($1.62 billion) to BBVA, the country’s second largest bank. The sale would mean nearly €12 billion losses.
BBVA beat competitors Santander and CaixaBank to buy the bank which received €12.5 billion in rescue funds. For BBVA, the sale means a greater presence in Catalonia’s “dynamic” market, the bank said in a statement. The Spanish government owns a 66% share in the troubled bank and the sale at €1.2 billion woudl mean the country lost €11.8 billion by propping up by the bank which teetered when thousands of borrowers defaulted on their loans. Spain will now turn its attention to selling off another failed bank in Bankia, which became the symbol of Spain’s financial crisis when it lost more than €19 billion ($26 billion) in 2012 and pushed the government to ask its eurozone partners for €41 billion in rescue loans to shore up the entire banking system. Under the terms of the European Union’s 2012 bailout, the Spanish government has until 2017 to sell its 68 percent stake in Bankia.