Wednesday, November 28, 2012
Spain's rescued banks to shrink, slash jobs
Spain's four nationalized banks will more than halve their balance sheets in five years, slash jobs and impose hefty losses on bondholders, under plans approved by the European Commission on Wednesday.
The measures open the door for nearly 40 billion euros ($52 billion)in euro zone bail-out funds for the state-rescued banks, offering hope for an end to Spain's banking crisis which has pushed the country to the brink of asking for sovereign aid.
The approval sets in place one of the most far-reaching over-hauls of any European banking system ordered by the Commission since the start of a banking crisis in mid-2007 with the near collapse of German lender IKB.
"Our objective is to restore the viability of banks receiving aid so that they are able to function without public support in the future," said European Union Competition Commissioner Joaquin Almunia said.
Bankia, NCG Banco, Catalunya Banc and Banco de Valencia were taken over by the Spanish state after unsustainable lending during the country's decade-long property boom left the lenders dangerously short of capital. Read more >>