Spain to rescue its banks

The Spanish government is set to launch a sweeping restructuring of its troubled regional savings banks in an attempt to reassure the market it can sort out the problems of its financial system.

AP Photo

Harry Wilson

Forty out of a total of 45 Spanish cajas will merge or form operating alliances with each other as the authorities look to prevent fears over the banking system from morphing into a wider market run on the country as a whole.

Alfredo Perez Rubalcaba, Spain’s deputy prime minister, said: “The government is preparing a plan, the aim of which is to increase the solvency and the credibility of the savings banks.”

It is hoped that private investors can be found to put money into the cajas. However, Spain’s Fund for Orderly Bank Restructuring could take stakes in those that are unable to attract outside investment.

Spain’s main IBEX index of leading shares closed up nearly 2pc on the back of the news, which helped calm fears of a banking crisis brewing in the country.

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