One of Spain’s largest banks, Caixa Bank (also known as La Caixa) is rumored to be in dire economic straits. The institution is thought of as “too big to fail” and if its troubles are indeed confirmed, the 100 billion euros bailout may not be enough.
The situation could intensify if Greece elects an anti-bailout government on Sunday.
Caixabank recently acquired Banca Civica, made out of small caja banks, and perhaps this is what brought the bank to the edge. This is one of the reasons that rating agencies downgraded the bank’s rating.
Depositors have been withdrawing money from Spanish banks at an accelerated pace since the situation deteriorated in mid-May. The phenomenon is especially strong within Spain’s expat community/
John Ward reports about this rumor doing the rounds. Earlier this week, EU competition chief Joaquin Almunia said that one Spanish bank might close down. It seems he was referring to smaller banks.
Further reading: 3 Scenarios for the Greek elections and EUR/USD.Get the 5 most predictable currency pairs