Spanish banks ordered to find another €50bn

Spanish banks will be required to find another €50bn in provisions to make up for ‘bad property assets' as the government carries out further reforms on the financial sector.

The recently-appointed economy minister, Luis de Guindos, has told the banks they must clean up their balance sheets without burdening the government, according to the FT.

The Spanish govenrment was expected to follow Ireland and set up a state-funded ‘bad bank' to take on non-performing assets and loans following the financial and property crisis.

However, stronger banks such as Santander and BBVA opposed these plans, forcing the governement to order a further €50bn to be set aside. This is much higher than analyst expectations and equivalent to 4% of Spain's GDP.

The Bank of Spain has reported that of the €338bn of property-related assets in the Spanish financial system, €176bn of these are ‘bad assets'.