Sareb increases capital to give entrance to private investors

• Large financial institutions together with the FROB provide the necessary funds for the transfer of assets of the nationalized
• The Board of Directors is constituted, which proceeds to the formal appointment of Belén Romana as president

The Asset Management Company from the Bank Restructuring (Sareb) has carried out a capital increase to bring the main partners (Santander, Caixabank, Popular, Sabadell and Kutxabank) into the shareholding. This contribution, together with that coming from the Fund for Orderly Bank Restructuring (FROB) and the one planned for the next few days, will allow covering approximately three-fourths of the total share capital of Sareb. In a first phase, the assets of the nationalized entities (BFA-Bankia, Catalunya Bank, NovaGalicia and Banco de Valencia) will be transferred to Sareb.

As of today, the relationship of the initial shareholders and their equity interests is shown in the following table (in millions of euros).

This disbursement will be completed in the coming weeks with the issuance and subscription of subordinated debt by private shareholders and the FROB.

The remaining contributions, up to the total of the necessary own resources (about 3,800 million euros) for this first phase, will be incorporated in the coming days through a new capital increase and the subscription of a subordinated debt issue by others investors and the FROB. This operation will be closed before December 31. Among the additional shareholders is the incorporation of several credit institutions and a group of private insurers.

Due to the ordinary commercial procedures proper to the constitution of a company of this size, it is not possible to carry out in one act the subscription of all the capital and private subordinated debt committed.

Practically all the main financial and insurance entities in Spain will participate in the capital of the company. The good response from the sector augurs well and profitably for the development of Sareb, a company that will manage an asset volume of around 59,000 million euros.

In addition, the Sareb Board of Directors has been constituted, which has formally appointed Belén Romana as President and Walter Luis de Luna as General Director. The directors are as follows: Remigio Iglesias Surribas (proprietary private shareholders), Antonio Massanell Lavilla (private proprietary shareholders), Javier Trillo Garrigues (independent), Luis Sánchez-Merlo (independent), Belén Romana García (proprietary FROB) and Walter Luis de Luna (Sunday FROB).

Once the second capital increase is carried out, the Board of Directors of SAREB will adopt its final composition, becoming formed by 15 members. Of these, five will be independent, in accordance with the provisions of Law 9/2012, and the rest will be proposed by the owners in proportion to their participation. The FROB will appoint four directors.

The promoter company of Sareb, established on November 28, is transformed from today into an entity with full capacity to act to fulfill its purposes. Therefore, a decisive step is taken in the implementation of the commitments contained in the Memorandum of Understanding derived from the European loan for the recapitalization of the Spanish financial sector. Sareb is a key player in this process whose objective is to absorb the real estate assets of financial institutions with aid to clean up their balance sheet.

Before the end of this month, Sareb will complete the acquisition of the assets of nationalized entities with an estimated volume of 44,000 million euros, in accordance with the parameters defined in the restructuring plans approved by the European Commission on November 28.

The transfer of Group 2 assets will take place in 2013 and will require a new capital increase and the issuance of new subordinated debt, which will be subscribed by the current shareholders or other new ones that are incorporated in this second phase.