Spain’s central bank wants a third of the country’s 45 savings banks to be quickly absorbed by stronger institutions as part of radical reform of the sector, a report said yesterday.
Bank of Spain Governor Miguel Fernandez Ordonez said a series of mergers were under discussion among regional savings and loans institutions, with the plans to be implemented within months.
“I think there are at least 15 institutions that should merge with others,” he said told the Financial Times (FT) newspaper.
“I hope [by] next spring we have restructured all these institutions, that’s my idea. We now have many, many mergers that we are discussing,” he said.
Spanish commercial banks got off relatively lightly from the subprime crisis last year that caused chaos in the financial sector around the world. However, some smaller saving banks were badly exposed to the collapse of the country’s property market, which led to higher bad debt ratios and liquidity problems.
These banks now account for about half of outstanding loans in Spain, the FT said.
In June, Spain announced a multi-billion-euro fund to help revive the financial sector by buying stakes in banks hit by the global crisis. Fernandez Ordonez wants to use this fund to achieve the goal of multiple mergers.
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