Brussels, 14/05/2012 (Agence Europe) - Euro Commissioner Olli Rehn has welcomed the changes to the Spanish banking system unveiled to Eurogroup by Spanish economy minister Luis De Guindos on Monday 14 May (see EUROPE 10613). In a press released issued on Sunday 13 May 2012, Olli Rehn said: “A prompt and profound reform of the banking sector is a cornerstone of Spain's crisis response and its overall reform strategy. It is an indispensable supplement of the determined fiscal consolidation and front-loaded structural reforms that can bring sustainable growth and more and better jobs. By deciding on these important measures for the banks, on top of those already announced in February, Spain is taking decisive action in addressing remaining vulnerabilities within the sector. The combination of increased provisioning against potential future losses, segregation of troubled assets, independent validation of balance sheets, and the availability of necessary public funds to support the overall reform effort is essential in order to reinforce investor confidence in Spanish banks”. The Commission said that the announced state aid would be examined in the light of compatibility with EU state aid rules.
Alongside part nationalisation of Bankia, the Spanish government expects the country's banks to set aside a further €30 billion in bad debt provisions. On Monday, Spain's five biggest banks told the government how much the funding requirements would cost, reports El Pais, namely €4.7 billion gross for Bankia, €3.4 billion for Caixabank, €2.7 billion gross for El Santander, €2.3 billion for Grupo Banco Popular and €1.8 billion for BBVA. Fears about Spanish banks and eurozone financial stability sent the risk premium on Spanish bank loans up to 6.3% on Monday. (MB/transl.fl)