Spain readies fund to restructure banks: report
A new public fund is being prepared to insure bank deposits and help out troubled regional saving banks.MADRID – The government of Spain is preparing a new public fund aimed at restructuring the nation's banks, daily business newspaper Cinco Dias reported Thursday.
The fund is aimed at the nation's troubled regional savings banks and the idea for it was put forward by the Bank of Spain, which on Sunday came to the aid of regional savings bank Caja Castilla La Mancha (CCM), it said.
Half of the money in the fund will come from public coffers and the rest from three sector funds made up of contributions from banks and credit cooperatives, it said, citing people familiar with the matter.
The new fund will be in addition to an existing deposit insurance fund, which insures bank deposits and intervenes for banks that need to be bailed out, it added.
Contacted by AFP, a Bank of Spain spokesman declined to comment on the report.
Central bank governor Miguel Angel Fernandez Ordonez told parliament on Thursday that Spain needed new tools to come to the aid of troubled banks.
The Bank of Spain on Sunday took control of CCM, replacing its directors with its own nominees and providing up to EUR 9 in liquidity.
CCM, which accounts for less than 1.0 percent of the assets of Spain's financial system according to the government, opened for business as normal on Monday and there was no rush by its clients to withdraw deposits.
Unlike in Britain and other European countries, no Spanish bank has been formally nationalised due to the global financial crisis, in large part because tight regulations protected them from US high risk or "sub-prime" assets.
But Spanish banks are facing a rapid rise in non-performing loans as unemployment swells following the collapse last year of a decade-long property boom that had been a key driver of economic growth.
AFP / Expatica