Spain nationalises struggling Banco CEISS
Spain announced Friday it is nationalising a fifth bank, Banco CEISS, a small lender weighed down with a negative value of 288 million euros ($385 million).
It is the latest development in the clean-up of a banking system that has been awash with bad loans since a 2008 property market crash.
Spain's state-backed Fund for Orderly Bank Restructuring, or FROB, revealed the red ink detected in CEISS's books in a statement.
The FROB had already said it would pump 604 million euros into the troubled bank.
But the negative value of CEISS means the injection leaves the state owning 100 percent of its capital.
Spain has already pumped 37 billion euros of European Union bailout funds into shoring up four nationalised banks: BFA-Bankia, NCG Banco, CatalunyaCaixa and Banco de Valencia.
Madrid received a second instalment of 1.865 billion euros this week to strengthen the balance sheets of four more banks, including CEISS. The other three banks had positive balance sheets.
Spain last year struck an agreement under which the European Union extended a rescue loan of up to 100 billion euros to clean up the banking sector under strict conditions.
The International Monetary Fund said Monday that reforms under that financial-sector support programme are nearly complete.
In January the Bank of Spain said the country's banks held 191.6 billion euros in bad or doubtful loans, nearly 11.4 percent of all credit extended.
The IMF cited also the "important progress" that came with the setup of SAREB, the recently formed "bad bank" which will take on the lenders' soured assets.
© 2013 AFP