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Spanish Banks To Get €90 Billion Bailout

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http://business.timesonline.co.uk/tol/busi...icle6574905.ece

A €90 billion (£76.9 billion) bailout fund for healthy as well as struggling Spanish financial institutions is expected to be approved tomorrow.

The fund, to help banks to restructure, is likely to be supported by the Spanish Cabinet at one of its regular Friday meetings, according to reports.

Cadena Ser radio, which cited a copy of the proposal, said that banks without capital shortages may have access to the fund if they need extra liquidity to improve efficiency.

The bailout plan is not expected to encounter opposition in the Spanish Parliament.

If banks use the fund, they should be open to possible mergers. Government approval to use the fund would be called for only if more than €27 billion were necessary.

As financial institutions crumbled around the world in the credit crunch, Spanish banks managed to avoid toxic debt thanks to careful regulation by the Bank of Spain.

But Spain’s Socialist Government has been forced to launch a rescue fund to save its ailing savings banks, whose bad loans have risen after the collapse of Spain’s decade-long building boom.

Spain’s savings banks have suffered most from the collapse of the property sector after years of lending to property developers and homeowners.

With the construction sector stagnating, many savings banks cannot access private markets and their options for raising capital are limited.

improve efficiency?

Do they mean improve the efficiency of bonus distribution?

How would access to this money improve efficiency?

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In other words. The Spanish Goverment anticipate that their overbuilt property supply isnt worth anything and expect massive losses even still and so we better give the banks some money before we completely kicked out of the Euro.

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Depends on the terms. If the Spanish banks are having to pay premiums for short term money in the markets then the Spanish govt lending them money at 0% would improve effciencies (nice spanish word for increase banking profits and bonuses).

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The endless boom in Spanish property prices has blinded the bank's management to the fundamentals of business. They are carrying retail networks like British banks in the 1960's. The pain in Spain is going to be very severe some time soon.

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