(Adds background and details about the deal's advisers.)

MADRID -(Dow Jones)- The Bank of Spain said Tuesday it has approved Cajastur's takeover of Spanish savings bank Caja Castilla-La Mancha, the only Spanish lender to be placed under administration by the country's central bank since the start of the credit crunch.

In a press release, the Bank of Spain said that Cajastur's undisclosed bid was the best fit to assure the sound financial footing for the bank andmeets goals to prevent cash injections with taxpayer money.

Spain's central bank added that the deal will have to be approved by both banks' boards and that it wouldn't require public funding.

The rescue of CCM, as the failed bank is also known, drew EUR1.3 billion from Spain's deposit insurance fund, which is funded by the contributions of banks.

UBS AG (UBS) advised the central bank in the transaction. Goldman Sachs Group Inc. (GS) advised Cajastur.

The Bank of Spain put CCM under administration in March to avoid a run on the savings bank and to prevent panic in the Spanish financial system.

It ousted the management, and the Spanish government gave CCM an EUR9 billion credit line to keep the lender afloat.

Like many of its peers, CCM expanded its balance sheet by lending aggressively to real estate developers during Spain's decade-long construction-fueled economic boom. That backfired when credit markets froze up in the wake of the U.S. subprime crisis and turned a correction of Spain's housing market into a crash.

Cajastur is based in the Northern Spanish region of Asturias, while CCM is from the southeastern Spanish town of Cuenca.

Savings banks in Spain aren't listed on the stock market.

Company Web Site: http://www.cajastur.es

-By Jason Sinclair, Dow Jones Newswires; 34 91 395 81 27; jason.sinclair@dowjones.com

(END) Dow Jones Newswires

11-03-09 1337ET