Saturday, 1 September 2012

Spain creates ‘bad bank’

THE SPANISH GOVERNMENT has agreed to the creation of a so-called bad bank to take on most of the trouble real estate assets of its banking sector, mirroring a move Ireland made in 2009 in response to the financial crisis.
The agreement of the country’s conservative government was part of a condition for receiving some €100 billion in assistance for its bank from its fellow eurozone countries.
In a situation which will be familiar to many in Ireland, banks have been weighed down by the cost of loans made to real-estate developers who built heavily prior to the collapse of the country’s property bubble in 2008.

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