Spain's banks detail new cost of property clean-up

 

Spanish banks unveiled fresh funds on Sunday to meet new government demands aimed at cleaning up the country's sickly property market and easing international markets' concerns about the troubled financial sector.

In its 4th attempt to mend the fall-out from a property crash 4 years, Spain's government said on Friday lenders must set aside €30 billion, on top of €54 billion ordered in February, as provisions against toxic real estate assets.

Spain's biggest bank Santander said it would set aside an extra €2.7 billion in funds against its rotten property assets, adding to the €2.3 billion it announced in February.

Santander said it would book the total €5 billion in provisions against capital gains and profits in the course of this year and said the charges would not affect is current capital ratios.

Meanwhile, Spain's third largest bank Caixabank said it would set aside a further €2.1 billion to meet the new government requirements, to be covered with operating revenues and potential capital gains.

Banking group BFA, the parent of Spain's fourth largest lender Bankia which was nationalised last week, said it needed a further €4.8 billion to meet the new provisioning demands.

BFA said it would cover the full amount this year but did not say how.

Madrid has offered state aid for banks unable to raise the extra funds in the form of 5-year loans, convertible into shares with an interest rate double the rate on government bonds.

Several smaller Spanish banking groups also revealed their additional provisions estimates over the weekend but so far none have said they would need state aid. Spain's second largest bank BBVA has yet to announce its additional provisioning needs.