Spain 'negotiating bad bank initiative'

30 April 2012

Government officials in Spain are in talks regarding the possible implementation of a so-called "bad bank" scheme in order to ease the strain on the country's ailing financiers.

According to the Financial Times, policymakers in Madrid are discussing the possibility of splitting property loans into various asset management companies as they seek to avoid the need for an international bailout.

Pressure on the Spanish economy has been building in recent times, as the yield on the nation's ten-year bonds went above six per cent earlier in April and last week, Standard & Poor's revealed it had downgraded its credit rating by two notches to BBB+ after unemployment soared.

In addition, data published by the National Statistics Institute this morning revealed Spain experienced economic contraction of 0.3 per cent during the opening quarter of 2012.

With this in mind, prime minister Mariano Rajoy has admitted drastic action is needed to resolve the country's problems.

"Spain needs - and needs urgently - deep structural changes, not window-dressing, in order to grow and create employment," he stated.

By Tony Aynsley

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