Spanish Northern Rock

Caja de Ahorras del Mediterraneo bank (CAM) has set aside the entire profit of 168 million euros it made from the sale of its share in another property firm, Metrovacesa, putting it into a reserve account instead of banking it as profit. Observers say the move has almost tripled the bank’s reserves and the action has been taken because its directors are anticipating an increase in both business and private loan defaults.
The property developer Llanera, which has 600 employees, declared itself insolvent on Tuesday of last week (see Spain in the UK Press, page 14) leaving six schools and 124 low-cost municipal homes in Valencia unfinished. The Banco de Valencia confirmed that it had granted Llanera 12 million euros of funding and would continue to support the housing project while CAM confirmed it would continue financing another Llanera project in the same region. Like Northern Rock in the UK, Llanera was dependent on the short-term money markets which have had serious problems in recent weeks.