Bank of Spain: savings banks restructuring 'almost complete'
Spain's regional savings banks have almost completed a consolidation process aimed at weathering the country's uncertain economic outlook sparked by the collapse of a property boom, the Bank of Spain said Tuesday.
"With the four merger plans approved earlier today by the Bank of Spain, the restructuring of the Spanish savings bank sector is now almost complete," it said in a statement.
"This process, encompassing a number of mergers that have been, or are in the process of being, authorised, is the biggest overhaul of the Spanish banking sector in recent history," said the statement, also released in English.
The central bank said the restructuring involves 39 of the country's 45 regional savings banks in 12 separate processes.
It said banks have requested a total of 10.19 billion euros (12.43 billion dollars) from a special government fund set up last to carry out their merger plans.
Spanish banks got off relatively lightly from the global credit crunch in 2008 as the country's strict rules meant they did not invest heavily in the high-risk US home loans that hurt financial institutions elsewhere.
But many regional savings banks have been exposed to bad debt since the collapse of the property sector at the end of 2008.
The central bank and the government had called for the consolidation of the sector in order to maintain liquidity.
Spain plunged into its worst recession in decades at the end of 2008 following the collapse of a decade-long property boom and only returned to tepid growth this year.
© 2010 AFP