Struggling Spanish savings bank Caja Mediterraneo (CAM) has been granted the 2.8 billion euros it needed to stay afloat after its planned merger with sector peers folded in March, the Bank of Spain said on Friday. State backed bank restructuring fund FROB will receive shares in CAM in exchange for the cash injection and take over management of the bank until a buyer is found.
"CAM's board have informed the Bank of Spain that they can not find an immediate viable solution (to their capital needs) and have asked that their managers be substituted," the central bank said.
CAM, based in the eastern region of Alicante known for scores of unsold holiday developments around coastal resorts such as Benidorm, is one of the savings banks which has suffered the most from the collapse of Spain's property market and financial crisis.
Spain's fragmented regional savings banks are the most exposed to the country's property crisis after their aggressive mortgage lending policies during Spain's decade-long housing bubble.
Investments in real estate and mortgage defaults have left many them with thousands of overvalued homes on their books, which led the government to oblige them to shore up their balance sheets through mergers or private investors or risk state intervention and nationalization.
CAM tried to attract private investors June after merger talks with three other savings banks fell through in March, leading CAM to ask for the state funds .
