Banca Cívica will have to merge with another bank in order to stay alive, because it will not be able to meet provisioning and capital requirements imposed by recent financial reforms. At least that is what those in charge at the bank have been talking about in private conversations held with executives from other banks. Banca Cívica executives have assured that they will attempt to start a process of consolidation. The message from Co-presidents Enrique Goñi and Antonio Pulido is clear: "We cannot do enough in just one year."
The group led by Caja Navarra and Cajasol is demanding 2.031 billion euros to clean up its balance sheet. Publicly, its directors are not hiding that they are considering a merger that would make this impact easier to bear, but they also assure that they might not merge should the somehow get the resources they need in 2012.
But how? This is the question that is still up in the air considering that in a recession, selling more shares or earning revenues will allow Banca Cívica to raise money quickly enough.
Goñi said a week ago that he intends to sell off a portfolio of industrials in order to net 400 million euros. But at that time he said that the potential returns on the bank's stock, worth around 2 billion euros, would hardly reach 200 million.
And Banca Cívica's profits ended up around 183 million euros, a feat that would be difficult to repeat while also dealing with the costs of adjustments that it will have to carry out in order to increase its operating efficiency, affecting some 1,500 employees.
Selloff plan is insufficient
The best case scenario is that Banca Cívica gets 400 million if they sell off their entire industrial portfolio. Yet this amount won't even cover a fourth of what they need to survive. Still, the bank has already come up with some of the provisions that it needs. Specifically, in 2011 the bank came up with 500 million as security against its assets, yet capital demands are greater than 1.1 billion.
