(Wall Street Journal) Spain’s new two-year plan to clean up its banks will require them to set aside €50 billion ($65.8 billion) to cover losses from souring loans as part of an effort to improve the flow of credit to the economy, Finance Minister Luis de Guindos said Thursday.
“At the moment, as you know, credit is falling by around 5% or 10%,” Mr. de Guindos said at a news conference where he outlined rules that will be approved at a Friday cabinet meeting.
Spanish Prime Minister Mariano Rajoy, who came to power in December, has made the banking cleanup a key element of his push to overhaul one of Europe’s largest ailing economies. The banking fixes put forward by the government of José Luis Rodríguez Zapatero, the previous prime minister, failed to shore up a banking system still reeling from the collapse of a decadelong housing boom.
At issue is €176 billion in troubled real-estate assets weighing on the banks’ books. The institutions have been unable or unwilling to unload the assets, which include repossessed homes and undeveloped land, because doing so would require them to recognize large losses.
Read more: Wall Street Journal
