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Spain’s saving banks seek new funding strategies

The Spanish savings bank sector’s days of annual loan growth of more than 20% are over as construction wobbles and cédulas are tarnished by the international credit crunch. Cajas need to re-examine their funding strategies and business plans, writes Peter Koh.

Principal portfolio holdings of the cajas

Caja Navarra sells on civic banking

Spanish housing market: Crisis? What crisis?


SPANISH COMMERCIAL BANKS such as Santander and BBVA are world famous for their expertise in retail banking but at home they have been steadily losing market share for the past 20 years to the country’s cajas de ahorros – local foundation-owned savings banks. Since being set free to expand outside their home regions, these banks, which have no shareholders but which must give a significant proportion of their profits to community and charitable causes, have doubled their share of the national market from about a quarter to almost half, eating up 20% of the commercial banks’ market share and surpassing their combined influence in the process.

Their expansion has been fed by a decade of rapid loan growth and an aggressive programme of new branch openings, paid for by a growing deposit base, plenty of retained profits and hundreds of billions of euros-worth of cédulas, or covered bonds.

But Spain’s deflating construction and property bubble promises to halve the annual rate of loan growth from more than 20% to something more like 10% or 12%.

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