Political deal reached in Spain to reform savings banks

5th May 2010, Comments 0 comments

Spain's government and opposition agreed on Wednesday to reform a law on regional savings banks, which have rattled markets due to the slow pace of restructuring moves, opposition leader Mariano Rajoy said.

"During the next three months, we (the government and opposition) will propose a reform of the legislation on savings banks ... to create a legal framework which guarantees their independence and increases the transparency of their management," Rajoy said.

The conservative leader addressed a news conference after meeting with Socialist Prime Minister Jose Luis Rodriguez Zapatero to discuss the country's economy as Spain came under market pressure over fears its recession could further weaken its public finances.

Spanish banks got off relatively lightly from the subprime mortgage crisis in 2008 as the country's strict regulations meant they did not invest heavily in the high-risk loans that hurt financial institutions elsewhere.

But many smaller unlisted saving banks were badly hit by the collapse of the country's once-booming property market, both through loans to developers and mortgages.

The regional savings banks, some of which are controled by regional politicians, have undergone a sweeping consolidation since last year.

© 2010 AFP

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