Spanish bank plans to open first U.S. office in D.C. next year

A newly formed Spanish bank that partners with charities and donates a portion of its profits to social causes plans to open its first U.S. office in downtown Washington early next year.

Grupo Banca Civica has filed an application with the Federal Reserve to operate a commercial bank in the United States and has rented a location at Pennsylvania Avenue and 17th Street NW.

The company -- formed by the merger last month of the Spanish regional banks Caja Navarra, Caja Canarias and Caja Burgos -- is the fruit of a wave of consolidation in Spain's troubled banking sector.

Many "cajas," regional Spanish banks that resemble U.S. savings and loans, are reeling under the weight of soured real estate loans made during the housing bubble. The Bank of Spain, which had to take over firms such as the Caja Castilla La Mancha, is encouraging the cajas to consolidate and get shareholders.

Banca Civica never had to ask Spain for rescue money, said I?igo Jodra, who manages the firm's U.S. operations.

"In absolute terms, we are already a solvent group," he said.

Enrique Go?i, chief executive of Grupo Banca Civica and former head of Caja Navarra, said he has long wanted to expand overseas. He said Washington made sense as a starting point because, compared with other U.S. cities, the capital region has a strong economy, a well-to-do population, a relatively easy commute to Spain and a large international population.

"In Washington, D.C., the [non-governmental organizations] have their headquarters," Go?i said. "For us, this is the most relevant city."

Banca Civica says it plans to distribute profits to investors and social groups, a model previously used by Caja Navarra. Last year, Navarra allocated $62.2 million to social causes, or roughly 30 percent of its profits, Banca Civica said.

Jodra said that giving away a portion of the bank's profit doesn't necessarily hurt shareholders. If the bank's business model can draw additional customers, then its investors benefit, too, he said.

"It's a win-win," Jodra said. His firm is still deciding how much profit from U.S. operations would go where, he said.

On Friday, Banca Civica held an inaugural celebration at its downtown office. It expects to begin operations there in early 2011, pending approval from U.S. regulators.