Better late

16 June 2009 By Fiona Maharg-Bravo

The support package for Spain’s troubled savings banks has been a long time coming. But the country’s banking sector needs restructuring as much as recapitalising. Luckily, Madrid’s bailout proposal seems to recognise this.

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Spain's finance minister said the government would shortly approve a bank rescue fund worth up to E99bn which could see the state take stakes in the country's savings banks.

Elena Salgado said investments would be in the form of socalled participatory shares which carry voting rights. She added that the Bank of Spain would take over temporary management of banks in receipt of the funds, pending repayment of the state's support.

The state would also have the power to override any veto of savings bank mergers by the local authorities that control them.

Salgado said only viable institutions needing temporary help would be eligible for state aid.

Meanwhile, Moody's, the credit rating agency, downgraded 30 Spanish banks and savings banks.

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