Spain overhauls banks for fifth time in three years for aid

Spain overhauled its banks for the fifth time in three years yesterday in order to secure up to €100bn in European aid for lenders crushed by bad loans resulting from the country’s extended property market crash.

The government created a so-called bad bank to take over tens of billions of euro in defaulted loans and unsaleable property and to accelerate the clean-up of the banking sector, said economy minister Luis de Guindos.

The bad bank will begin operating in late November or early December, will exist for between 10 and 15 years, and is intended to be profitable over that period so that Spanish taxpayers do not bear the burden of the bank rescue operation.