Historic bankruptcy filed in Spain

TWO Spanish investment firms that own 31% of French property company Gecina have filed one of the biggest bankruptcy actions in Spanish history after a bank refused to refinance a ¤1.6bn loan.

Alteco and MAG Import said yesterday they were up to date with their payments on the syndicated loan and the refinancing effort had been supported by other banks involved.

Uncertainty over the fate of the two firms’ stake in Gecina, which has a market capitalisation of ¤5bn, has knocked the French property company’s shares down 4% to ¤77.5.

Spanish banks have already written off hundreds of millions of euros in losses on soured property investments after a property market crash in 2008 and are now waiting for rescue funds from Europe.

The banks with the highest exposure to the syndicated loan were Popular, Bankia, NCG, France’s Natixis and Royal Bank of Scotland, sources said. One source said Natixis had balked at refinancing the loan. The bank did not immediately comment.

Many businesses related to Spain’s property and construction sectors have crumbled since the market crashed. Other businesses have relied on bank refinancing to stay afloat.

One source put Bankia’s exposure to the syndicate at ¤234m, while newspaper El Pais said Popular’s was ¤264m. Shares in Bankia, which has been taken over by the Spanish state, fell 3% and Popular’s were down 1.5% in Madrid trade yesterday.

Popular was the largest nonnationalised bank to fail a stress test on Spanish banks last week, forcing it into a ¤2.5bn rights issue. “We understand this (Gecina) will be one of the credits included in the stress test to the sector,” Banco Sabadell said in a note. Reuters