La Caixa takes the short cut

The long-rumoured conversion of Catalán caja, La Caixa, to a bank is coming to pass. Although the intimate details are not yet made public, the plan appears to be hive off their banking operations and trade them to listed (14.5 bn euro market cap), 60 percent owned holding company, Criteria, for this latter's investment portfolio. The charitable organization that remains after this operation lives from the dividends generated from companies like Gas Natural Fenosa, Telefónica, Criteria itself and a series of foreign banks. In turn, Criteria becomes a bank which, following what Reuters reports as a coming convertible debt issue, will sport Basel II core capital of 10.9% - this aside from being 40 percent owned* by outside interests and already an Ibex 35 component.

The immediate effect would be to shrink the savings bank sector to a much smaller (if sicker) under 40 percent of the Spanish banking world - this before La Caixa's thought-to-be-imminent swallowing up of three regional cajas that have run out of viable options. In a perfect world, it might also get the idiot brigade to finally stop heaping everybody into the same pile.

Secondary results might include getting Rodrigo Rato and BanCajaMadrid's ass into gear.

Criteria up 3.18% before trading was halted this morning.

*Cajas y Bancos is reporting that the public float will shrink to 19% following the operation.

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