Arab Today, arab today spainbanks must pay for future capitalisation costs
Last Updated : GMT 11:52:44
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Spain:Banks must pay for future capitalisation costs

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Arab Today, arab today Spain:Banks must pay for future capitalisation costs

Madrid - AFP

Spanish banks, not taxpayers, must pay for any future costs of recapitalising the financial sector so as to avoid deepening the public deficit, Finance Minister Elena Salgado said on Thursday. The reform announced by minister had a clear messsage: banks must now stand on their own feet, six days after the state sealed a 7.55-billion-euro ($10.2 billion) overhaul of the financial sector. \"The government\'s intention is that future losses that may occur in the recapitalisation of the financial sector should not be transferred to the taxpayer nor increase the public deficit,\" she told a news conference. The Spanish government will not budge from its vow to slash the public deficit from the equivalent of 9.2 percent of gross domestic product last year to 6.0 percent of GDP this year, Salgado said. Spain has promised to further reduce its public deficit to 3.0 percent of GDP -- the European Union-agreed ceiling -- in 2013. \"The six percent of the deficit -- we have always said that this target is irreversible,\" she said. Salgado\'s announcement came on the same day that European Commission head Jose Manuel Barroso called for member states to take coordinated action to recapitalise banks. The Spanish minister made clear that her government has already acted to help banks and its priority now is the deficit. Asked about the EU call, Salgado said states would have to set the criteria for such action and \"it should not suppose a need for additional capital for Spanish entities,\" which she considered to have sufficient capital. On September 30, the Spanish government announced it had completed a financial sector overhaul, securing savings banks that nearly bankrupted the country in the wake of the 2008 global financial crisis. A state restructuring fund, the FROB, injected 7.55 billion euros in four savings banks: 568 million euros into Unnim, 2.47 billion euros into NovaCaixaGalicia and 1.72 billion euros to CatalunyaCaixa, in addition to 2.8 billion euros pumped into Caja Mediterraneo in June. The banks raised only 5.83 billion euros in private funding. The Spanish state had already injected another 10 billion euros in an earlier stage of restructuring, which began in 2009. The financial restructuring has cut the number of savings banks from 45 to 15 through a series of mergers, and the vast majority of them are retail banks, allowing them to be better managed and capitalised. \"Now, 98.3 percent of savings banks\' active and passive assets are managed by banks,\" Salgado said. She said the new rules on bank restructuring would be adopted by decree with no need for support from parliament, which was dissolved last month ahead of an election widely expected to turn over power from the ruling Socialists to the conservative opposition Popular Party. A new bank-financed deposit guarantee fund will be created by merging three existing funds -- with a combined 6.593 billion euros -- so as to guarantee any future losses linked to financial sector restructuring, Salgado said. This new combined bank fund would thus provide a guarantee to the Spanish bank restructuring fund, the FROB, for any potential losses linked to the state\'s aid to the sector, she said.  

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Arab Today, arab today spainbanks must pay for future capitalisation costs Arab Today, arab today spainbanks must pay for future capitalisation costs

 



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