Major Spanish banks to contribute to regional rescue fund

13 September 2012

Three of Spain's biggest banks have committed to contribute billions towards a new rescue fund set up for ailing regions across the country, sources have indicated.

Insiders with knowledge of the ongoing talks have told Reuters that Santander, BBVA and La Caixa will each pay €1.6 billion ($2 billion) of the government's €8 billion guaranteed loan.

This measure was first unveiled by Madrid policymakers in July and the central administration will provide just under half of the total regional liquidity mechanism, which is worth a total of €18 billion.

And it has now been established that some of the nation's foremost financiers will pool together to provide the lion's share of the government's commitment.

Areas such as Catlalonia, Murcia and Valencia have already announced their intention to take advantage of this liquidity line with other regions expected to follow suit, while it is also thought this programme could help Spain avoid a full-scale sovereign bailout.

By Claire Archer

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