EU injects further $2.5bn into Spanish banking system

21 December 2012

Four Spanish savings banks have received a significant injection of funding from the European Union (EU) as the reformation of the country's financial system continues.

It emerged yesterday (20 December) had granted BMN, CEISS, Caja 3 and Liberbank a collective aid package worth around €1.9 billion ($2.5 billion) on the grounds that the lenders will cut the size of their balance sheets by between 25 per cent and 40 per cent over the next five years.

This represents the second phase of the EU's overhaul of the ailing Spanish banking sector, which has been badly-damaged by the nation's toxic property market.

The plans to restructure this group of four banks include a minimum of 4,000 job cuts and the requirement for the companies to refocus their priorities on lending to small businesses and retailers, Reuters reports.

Joaquin Almunia, EU competition commissioner, said the changes "will make these banks viable again, thereby contributing to restoring a healthy financial sector in Spain".

By Tony Aynsley

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