Valencia government wants to keep stake in CAM after its sale

The CAM and local governments in Valencia and Alicante still haven't thrown in the towel despite the Bank of Spain's recent intervention, and they aim to stay involved in the newly-created bank, which is a collection of various shares that will be sold off in either September or early October.

According to sources familiar with the lender, the objective is to leave the CAM with 10% to 30% of capital. The rest would be sold off on the public market to the highest bidders. This plan was just utilized in the Caja Castilla-La Mancha deal at the end of 2009. In that deal, Cajastur was put together with 75% of Banco CCM and the rest ended up in the hands of Fundación CCM.

In this way the CAM, which like the Manchegan bank Cajastur will become a group controlled by the regional and local governments, could continue investing in public works thanks to the dividends it will get from the bank. Further, according to other sources from the financial industry, this set up would allow for not including some of the CAM's deficits in these shares, which would facilitate interest for some of the buyers and reduce the deal cost for the Frob.

The CCM would keep the toxic assets and would try to liquidate them over the course of a set period of time. Or they could be transferred to the Frob. In the CCM's case, the toxic assets are owned by the Fondo de Garantía de Depósitos (a unit that took on intervention costs), and they are currently managed by Cajastur.