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(Corporate Collapse)- on analysing the spanish company CAM bank which is in insolvency administration - Essay Example

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(Corporate Collapse)- on analysing the spanish company CAM bank which is in insolvency administration

The Balance Sheet Test assesses the value of the assets possessed by a company. If assets are lesser than liabilities, then the company is considered to be in the process of collapsing. For most companies, the insolvency process is considered the last resort. Therefore companies do all they can to avoid the process. The insolvency process is used to rescue companies that have been operating for quite some time but are facing liquidity problems. Moreover, companies with large debts and have lesser liquid assets than the loan are considered incapable of paying their debts. Caja de Ahorros del Mediterraneo was the ninth bank in Spain to collapse. In 2011, FROB rescue managers realized that the bank had several irregularities, which were attributed to creative accounting for personal gains. This paper focuses on analyzing the Spanish company "CAM bank" which is in insolvency administration (Penty 2011, Web). Overview of Caja Mediterraneo (CAM) Bank Caja Mediterraneo, or CAM was a savings bank located in Spain that had to be sold to Banco Sabadell for one Euro. Caja Mediterraneo was a non-profit social institution, which had benefited more than five, 100, 000 people from its social commitments. In 2007, the bank had a budget of 60.1 million euros to be used for social commitment activities. The bank incurred great losses, which led to its collapse. (ANCODEESPANA 2012, 3-10). In the first nine months of 2009 alone, the bank lost 1.7 billion Euros. The loans that could be considered bad were about 20.8 percent. CAM was formed after 29 financial institutions integrated. The institutions had been formed in different times with the oldest having being formed as early as 1875. The bank adopted its current name in 1988 (manta 2012, Web). The trademark Caja Mediterraneo started being used in 2007. Initially the bank used the trademark Caja de Ahorros de Alicante y Murcia. Some of the institutions absorbed to form CAM include Caja de Ahorros de Torrent, which had been formed in 1906, and Caja de Ahorros Provincial de Alicante y Valencia which was absorbed in 1991 (‘Caja Mediterraneo and Accenture Deploy Alnova Core Banking Platform’ 2010, Web). By 1975, several other institutions had joined to form the current CAM. Such institutions included Caja Rural de Ahorros y Prestamos del Sindicato Catolico Agricola de Yecla, Monte de Piedad y Caja de Ahorros de Alcoy, Caja de Ahorro y Monte de Piedad de Yecla, Caja de Ahorros de Nuestra Senora de los Dolores in Crevillent, Caja de Ahorro y Monte de Piedad de Elche, Caja de Ahorros de Novelda, Caja de Ahorros de Nuestra Senora de Monserrate, Caja de Ahorros del Sureste de Espana, Caja de Ahorro y Monte de Piedad de Alicante, and Caja de Ahorro y Monte de Piedad de Jumilla. Others include Caja de Ahorro y Monte de Piedad de Murcia, Caja de Ahorro y Monte de Piedad de Cartagena, and Caja Rural de Ahorros y Prestamos del Sindicato Catolico Agricola de El Progreso (‘Spain's central bank favors merger of Caja Madrid’ 2010, Web; manta 2012, Web). By December 2007, CAM Bank was considered the fourth largest Spanish savings Bank. The ranking was based on customer loans and deposits. Moreover, the Bank was ranked the third larger in term of market share and the number of office openings. The bank originated in Murcia and Alicante provinces and offered banking services across Spain. With a network of about 1,100 ...Show more

Summary

CAJA MEDITERRANEO (CAM) BANK INSOLVENCY By Institution 1st, February, 2013 Caja Mediterraneo (CAM) Bank Insolvency Introduction The insolvency process entails attempts to rescue failing financial institutions. A company is considered bankrupt if it is incapable of paying its debts…
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(Corporate Collapse)- Essay on analysing the spanish company CAM bank which is in insolvency administration essay example
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