| At first sight Spain's lucrative privatization programme seems to be over. Spain has provided nearly Pta4 trillion ($24.2 billion) in privatization receipts since 1996, making it Europe's largest and most dynamic sell-off of state assets. With the exception of airline Iberia, state privatization agency Sepi has emptied its portfolio of large public companies. Now, though, it looks as if another Pta10 trillion or so of work for investment bankers may be waiting in the wings. Bankers, businessmen and multilateral institutions are turning their attention to Spain's 51 cajas de ahorros (savings banks), which account for half the banking system. Pressure is mounting on the centre-right government to open them up to private capital. The IMF and OECD have recommended privatization and even the powerful Spanish business confederation, Círculo de Empresarios, says it's wrong for "half of Spain's financial system to be lacking ownership and under the control of political parties". Further pressure is likely to come from private-sector banks that would welcome the opportunity to expand their retail operations by acquiring cajas. They cannot under current legislation which perversely allows the cajas to take over banks. The cajas have not hesitated to take full advantage of their protected mutual status by snapping up banks at the rate of one a year for the past seven years, including the Spanish operations of UK bank Abbey National and a local Deutsche Bank subsidiary. |