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Mid-size banks play hard to get

Spain's banking market is Europe's most attractive, and theoretically at least there's still room for more consolidation. Spanish bankers, though, reckon potential targets are not in a rush to give up their independence. But then they might overcome their hesitancy if the price is right.

SPAIN'S BANKS LOOK as if they may be embarking on a final phase of consolidation. One deal has been done this year, there's another on the way, and the list of potential buyers is as long as the Paseo de la Castellana snaking through the centre of Madrid. There's just one problem, Madrid's deadpan investment bankers assert: nobody wants to sell.

Of course, nothing supports the price of a potential acquisition like the sense that it's the last on the shelf. That's one of the reasons why Barclays agreed in May to pay e1.1 billion for Banco Zaragozano - approaching 20 times the Spanish bank's earnings. And despite the eyebrow-raising price, there's plenty more in Barclays' coffers should the right opportunity arise, and in many other banks' vaults besides.

Spain's dynastic banking families may be in the game for love more than for money, but they wouldn't have made their market so highly coveted had they not been armed with a keen sense of financial value as well. The boards of the main mid-market targets wouldn't be doing their jobs properly if they hadn't worked out just how much they could get for their businesses in the current climate.

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