Santander to make 2.3 bln euros extra provisions

 

Santander, the euro zone's largest bank, said on Tuesday it would make additional provisions of 2.3 billion euros to meet new government rules on property holdings.

In a statement to the stock exchange regulator, the bank said it needed a total of 6.1 billion euros of provisions under the new rules aimed at cleaning up property assets sitting on bank balance sheets from the country's property crash.

But 1.8 billion euros have already been booked against 2011 results and 2 billion euros were already covered in an existing buffer, the bank said.

Santander said it would use capital gains from its sale of Banco Santander Colombia to come up with 900 million euros of the additional provisions.

Spain said on Thursday it would force banks to book losses of up to 80% on assets such as undeveloped land that banks seized when property developers went bankrupt. Spanish banks had previously written down 30% in an earlier financial sector reform. The government said its new rules would mean Spain's banks would have to recognise and deal with an additional 50 billion euros in losses on property assets.