ECONOMY

In Brief

Four Spanish savings banks plan to join forces Four Spanish savings banks with more than 135 billion euros ($167 billion) in total assets said they plan to combine, as regulators struggle to shore up the country’s financial system and revive economic growth. Caja de Ahorros del Mediterraneo, Grupo Cajastur, Caja de Ahorros de Santander y Cantabria and Caja de Ahorros y Monte de Piedad de Extremadura submitted a proposal to Spain’s central bank to pool their businesses and form the nation’s fifth-largest financial group, they said yesterday in a filing. The Bank of Spain is urging mergers among «cajas,» the 45 banks run as foundations that boosted lending more than fivefold during Spain’s 10-year housing boom. The government is seeking to buttress the weakest banks and limit the cost of further bailouts amid investor concern about its budget deficit, forecast at 9.3 percent of gross domestic product this year. «Many of them are half bankrupt,» Rafael Pampillon, head of economic analysis at the IE Business School in Madrid, said in an interview, referring to all the cajas. «They have loans to property developers and mortgages that have turned toxic and, by mixing them with other savings banks, the risk is diluted.» (Bloomberg) Lender Alpha’s earnings seen down 49 percent Alpha Bank, Greece’s third-largest lender, was expected to report a 49 percent drop in first-quarter net profits tomorrow, hurt by the recession and the country’s debt crisis, a Reuters poll found. Net profits were forecast at 43.5 million euros ($53 million), with net interest income seen as up 10 percent to 443 million. A deepening recession in Greece, with the economy seen as contracting by 4.0 percent this year, has resulted in anemic loan growth. Asset quality deterioration has led to a rise in loan-loss provisioning. Greek banks also faced higher funding costs, as the availability of wholesale funding fell due to the debt crisis. (Reuters) Deficit widens Greece’s current account deficit widened year-on-year in March to reach 3.01 billion euros ($3.67 billion), mainly due to a bigger trade deficit on higher oil prices, the country’s central bank said yesterday. Year-on-year, the current account gap widened 12 percent, or 327 million euros ($398.4 million). (Reuters) Dubai stake steady Dubai Group LLC doesn’t plan to sell its holdings in Marfin Investment Group SA and Marfin Popular Bank SA of Greece, said the investment company owned by Dubai’s ruler Sheikh Mohammed Bin Rashid al-Maktoum. «Following a meeting in Athens, Dubai Group confirmed that it does not intend to sell its stake in both Marfin Investment Group and Marfin Popular Bank,» Dubai Group said yesterday in response to questions from Bloomberg News. «Dubai Group has nominated three of its representatives to be elected as board members at the forthcoming annual shareholders meeting of both companies and has expressed its full satisfaction and confidence in the companies’ management under the leadership of Andreas Vgenopoulos,» it said. Dubai Group owns 17.8 percent of Marfin Investment and has a 17.3 percent stake in Marfin Popular, according to Bloomberg data. (Bloomberg) South Stream signatures Russia’s Gazprom and Greece’s natural gas grid operator DESFA will sign a deal on June 7 to build the Greek portion of South Stream, a Russian-led natural gas pipeline project, an official said on Monday. «The deal will be signed in Moscow,» DESFA spokesman Sotiris Hiotakis told Reuters. Under the provisions of the agreement, DESFA and Gazprom will each have a 50 percent stake in the Athens-based joint venture which will build and manage the part of South Stream running through Greece, Hiotakis said. Gazprom-led South Stream has been designed to bypass Ukraine to transport Russian gas under the Black Sea and onward to Western Europe. It is a rival to the EU-backed Nabucco pipeline to bring gas from central Asia and Iran. Greece joined the South Stream project in 2008 as part of efforts to increase domestic use of natural gas and become a transit country for the commodity. The Greek section of South Stream, which will run from the Bulgarian-Greek border to Greece’s western coast, is estimated to cost up to 1 billion euros ($1.24 billion). (Reuters)