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Spanish 'Bad Bank' to Absorb its Worst Property Assets and Defaulted Loans

Spanish 'Bad Bank' to Absorb its Worst Property Assets and Defaulted Loans - Spain - property loan - property


Spain's government has approved the creation of a so-called "bad bank" that will take over most of the nation's worst property assets and defaulted loans, reported Reuters over the weekend, in an effort to secure some much-needed eurozone bailout money for the nation's loss-making banks and to reform a banking industry devastated by a property crash.



The move is Spain's fifth attempt in three years to overhaul its financial sector; and has been designed to not only let Spanish banks eventually begin to receive money from a 100 billion euro ($126 billion) European reserve, but to also restore market confidence in the country's banking system.

"This brings reform of the finance system to its crowning point," added Deputy Prime Minister Soraya Saenz de Santamaría on Friday, with the nation's Fund for the Orderly Bank Restructuring (FROB) also set to inject capital into the country's biggest ailing bank, Bankia, in order to meet the demands of the European rescue of the financial sector.


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