Tags: Spain | Financial Crisis

Spain to Approve 'bad Bank' for Toxic Assets

Friday, 31 Aug 2012 08:39 AM

MADRID (AP) — Spain's government is meeting to approve a new financial sector reform that will create a "bad bank" to contain toxic property investments and will give the central bank more powers to shut down troubled lenders.

Friday's financial reform will be the fifth such package Spain will have cleared since the economic crisis began in 2008.

The creation of the bad bank is among conditions set by Spain's 16 eurozone partners in exchange for a €100 billion ($125 billion) loan for Spanish lenders hit by the country's real estate crash.

Spain's banks have an estimated €176 billion in bad real estate loans and investments.

The country is battling to convince investors it can handle its finances and avoid following Greece, Ireland, Portugal and Cyprus in requesting a government bailout.

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