Spain has turned its struggling savings banks, or “cajas”, into ordinary banks, according to a government announcement yesterday .
The move equals a part-nationalisation of its weakest banks, but it may yet stop a wave of bank rescues.
Under the new regulation, all credit institutions need to meet core capital requirements of 8% in excess of those already required under Basel III.
Elena Salgado, the minister of economy and finance, says the plans are intended to restore confidence in Spain’s markets and the financial sector in Madrid. (article continues below)
Credit institutions will have until September to comply with the revised regulation.
The Spanish government’s Fund for Orderly Bank Restructuring will buy up the equity of those cajas that have failed to raise the capital, at market prices. It may also appoint its own directors to the board of the cajas.
Those measures are temporary and will expire in December.