Spain gets $51 bn from Brussels to bolster banks

Brussels, Dec 12 (IANS/EFE) The European Stability Mechanism transferred to Spain the equivalent of 39.5 billion euros ($51 billion) to recapitalize four nationalized banks and help fund a “bad bank” set up to absorb toxic assets, eurozone sources said here Tuesday.

Madrid has received the transfer, officials at the Spanish economy ministry confirmed.

Spain’s state-backed FROB bank restructuring fund will use 36.97 billion euros to recapitalize the nationalized banks.

Nearly half of that total – 17.96 billion euros – will go to Bankia, while 5.43 billion euros will be disbursed to Novagalicia, 9.08 billion euros to CatalunyaCaixa and 4.5 billion euros to Banco de Valencia.

Another 2.5 billion euros will fund FROB’s participation in the Sareb bad bank, recently set up to take on Spanish banks’ toxic real-estate assets.

As a condition of the aid, the European Commission is requiring that the banks undertake “very large and very demanding” overhauls between now and 2017.

The Spanish economy remains hampered by the fallout from the collapse of a long-building housing bubble, which left many of its banks saddled with toxic assets.

The Iberian nation’s unemployment rate currently stands at 25.02 percent overall and more than 50 percent among young people.

—IANS/EFE

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IANS 2012-12-12 11:32:06