29.08.2012
By Simon Miller
Spain has reached an agreement with the European Union over a 'bad bank' framework according to its economy minister Luis de Guindos.
The bank will take on the toxic assets of bad loans and repossessed real estate that have been hurting Spain's financial sector after its property bubble burst four years ago.
With the structure in place to handle these debts, Spain would be in line to get up to €100 billion in European aid for its financial sector.
The Troika - the European Commission (EC), the European Central Bank and the International Monetary Fund - met with officials from the Bank of Spain and the economy ministry in Madrid last Friday to discuss the bank's creation and it was reported that the EC had asked the Spanish government to delay any announcement until this week.
The government will approve its regulatory framework on Friday, de Guindos told reporters
"There has not been any disagreement with Brussels," he said.
Spain's government is also expected to grant the central bank new powers to intervene with struggling lenders at the Cabinet meeting on Friday with the country's bank rescue fund gaining more capacity to wind them down if they fail, Reuters reports.
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