Spain pressurises banks for €30bn provision

Spain will force banks to increase provisions against real estate loans by about €30bn and will hire two auditors to value lenders’ assets in a fourth attempt to clean up the industry.

Banks will have to raise provisions on still-performing property loans to 30% from 7% on average and the government will provide funds for those that need support, Spain’s economy minister Luis de Guindos said yesterday in Madrid.

The state will inject less than €15bn into struggling banks, and the funds won’t add to the budget deficit, he said. The government will also force all banks to move foreclosed real estate assets off their balance sheets into independently managed companies so they can be sold, said de Guindos.