Crisis hinders key caja float

ONE of Spain’s flagship savings bank flotations was put back by a day yesterday as the sovereign debt crisis forced book-building down to the wire. The initial public offering (IPO) of Banca Civica, one of two vitally important deals underway in Spain, will be pushed

back by a day to 19 July, giving investors an extra 24 hours to absorb the results of Europe’s stress tests, due to be released after markets close on Friday.

Several cajas, or Spanish savings banks, are expected to fail the tests. But both Banca Civica and Bankia, which aim to raise around €700m and €4bn respectively, have said they are pressing ahead with their float plans, with Bankia still due to price on Monday.

The deals, particularly Bankia, are viewed as key bellwethers that signal whether or not investors can be drawn back into supporting untested European financials at a time of intense volatility in the sector.

Dramatic market moodswings in recent days have knocked market risk appetite and sources have told City A.M. that much of the book-building is likely to happen in a last-minute flurry after investors have a chance to judge the rigor and transparency of the EU’s stress tests.

Investors have peppered Bankia’s management with questions over its €33bn in real estate exposure and its reliance upon wholesale funding given a 160 per cent loan-to-deposit ratio. However, the caja group says it is fully funded until 2014.

The Spanish government has warned its savings banks they have until the end of the month to raise enough cash to meet capital requirements or face full nationalisation.