Passing The Buck

Last mentioned at IBEX Salad with regard to its providing of 600 million euros of bridge financing to allow Grupo SOS to make off with parts of Bertolli brands (thus permitting, in near-deterministic turn, Caja Madrid to lose 75 million this week alone on its idiot January move - SOS now off 58% in four days), Ahorro Corporación is the self-described 'financial services' arm of 42 Spanish cajas de ahorros. This would mean that they manage the mutual funds sold by their owners' branches, cobble together the mortgage-backed bonds that their bosses now present to the Banco de España as collateral for survival financing (they used to market them, too, when that term applied) and, now, will be assuming responsibility for the immense property porfolio that the cajas have amassed in lieu of actually foreclosing on borrowers.

Cotizalia, and everybody else, reports today that AC will be forming a holding company, to go by the name Ahorro Corporación Soluciones Inmobiliarias - the last two words mean 'real estate solutions' - that will be taking 3 billion euros worth of unsellable properties off the hands of 23 of its proprietors. Apparently denying that they are removing toxic assets from the others' books, they insist that this will function as a long term marketing co-operative whose goods will be sold directly through the branch offices of member institutions. In return for their contribution to the capital social of the new company, subscribing cajas will take an ownership stake commensurate with their degree of involvement. According to the article, substituting shares in ACSI for actual properties will allow members 'to reduce and diversify risks'.

This one comes rapidly on the heels of yesterday's announcement that Moody's had put Ahorro Corporación's A2 rating on downgrade watch, citing its links to its owners and principal clients as the fundamental reason.

More Shuck and Jive

Late last July, Caja Mediterraneo produced the first IPO - so to speak - of a Spanish savings bank. Having successfully sold somewhere between 290 and 360 (according to the source selected) million euros worth of 'cuotas participativas' to unsuspecting branch customers, CAM has now come up with another great idea to shore itself up against exposure to the Valencia property market. Expansión tells us that they are now proposing to fob off more of these same non-voting shares, naturally on a purely voluntary basis, to its employees - in substitution of a portion of their salaries. Given Spain's rather onerous compensation laws in the event that an employee gets fired, we suspect that there will be a direct relationship between the degree of voluntary-ness that might be accorded a given bank teller in this regard and the shortness of time he or she has been working the line.

To avoid the fussing and fighting amongst the ranks that will surely ensue from the certain oversubscription to the offer, management has decided to limit any one person's participation to 12,000 euros.

------------------------------