Spain okays 9 bln euro fund to aid banks

MADRID, June 26 (Reuters) - Spain's government on Friday said it approved a 9 billion euro ($12.54 billion) fund to avoid possible problems at banks and support credit supply to the economy.

"We are trying to avoid problems at any institution and to create better credit conditions," Deputy Prime Minister Maria Teresa de la Vega said during a press conference after a government cabinet meeting passed a decree to create the fund.

The government will provide 75 percent of the 9 billion euro capital in the fund, which will be allowed to issue debt up to three times its value this year.

Economy Minister Elena Salgado said there was no urgent need to use the fund but banks could need future support.

"Some institutions could have problems if the international financial crisis continues," Salgado said during the press conference.

(Reporting by Andrew Hay; Editing by Jason Webb)