Text size:

  • Small
  • Normal
  • Large

UAE and Qatar to help out Spain

Spain's troubled savings banks receive a big capital injection from the UAE and Qatar.

The UAE and Qatar are set to provide a large cash injection to Spain's banking sector, as the country's prime minister finishes a tour of the Gulf.

Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, said the UAE would provide 150 million (Dh761.2m) to finance the recapitalisation of the Spanish cajas de ahorros, or savings banks, without specifying which would receive funds.

Speaking in Dubai, Jose Luis Rodriguez Zapatero, the Spanish prime minister, said the UAE would "continue their investment in the Spanish economy".

The move follows a similar announcement from the Qatari government that it would provide 300m for the cajas as part of a package of investments in the country. The UAE and Qatar have intervened in the past to help western banks, such as Barclays and Credit Suisse, secure additional sources of funding.

Mr Zapatero said both countries had a "great interest" in the recapitalisation of Spain's banking sector. The Spanish cajas have been recognised as one of the weak spots in the country's banking sector. While banking giants such as Banco Santander and Banco Bilbao Vizcaya Argentariaescaped the worst of the global financial crisis, the cajas - heavily exposed to the country's property bubble - quickly found themselves in need of fresh capital. The Bank of Spain, the country's central bank, said about 100 billion of the cajas' exposure to property was "classified as potentially problematic".

It recently announced new capital requirements for the cajas, giving them until March 10 to find new funds or face nationalisation.

Moody's Investors Service expects the cajas to require 50bn in new capital to meet the central bank requirements, in excess of the 20bn estimated by the Spanish government.

"Any injection of capital would be welcome, no matter where it comes from, whether from private investors or the Spanish government," said Alberto Postigo, an analyst at Moody's in Madrid.

"If all these funds are going to be concentrated in a specific savings bank where the capital gap is roughly the same rate it could be positive, but talking at a system-wide level, this [total of] 450m is a very small amount.

"I reckon that many steps will be necessary."


Back to the top

More articles

Editor's Picks

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 A Brabus Mercedes 6x6 Sports Utility Vehicle is readied for display during Auto China 2014 in Beijing, on April 20. Adrian Bradshaw / EPA

In pictures: Auto China 2014 exhibition

Leading automakers have gathered in Beijing for the kickoff of China’s biggest car show, but lacklustre growth and environmental restrictions in the world’s largest car market have thrown uncertainty into the mix. More than 1,100 vehicles are being showcased.

 The New York Stock Exchange. Rising interest rates will shift momentum away from bonds and back towards risk assets such as stocks. Richard Drew / AP Photo

Plan ahead for rising interest rates

It is now over five years since the majory central banks slashed interest rates to record low but that is all about to change. So, how will rising interest rates affect you?

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.


To add your event to The National listings, click here

Get the most from The National