| WASHINGTON, April 21
WASHINGTON, April 21 Spain is considering the
idea of creating a "bad bank" to take over non-performing
real-estate loans from Spanish banks to help clean up the
sector, but so far there are no plans for such an institution,
European officials said on Saturday.
"There is no plan or decision, but some consideration, as
far as I know. It could, possibly, be a good idea," one senior
European Union official said.
The official said the idea had not yet been discussed with
the European Union, whose institutions would likely get involved
should it the idea get more developed.
"There have been outside suggestions for such a bad bank,
but to the best of my knowledge there are no such plans," a
senior euro zone official said.
A sharp fall in Spanish real estate prices, which some
economists say could continue, has raised market concerns about
the mortgage portfolios of Spanish banks and the size of their
Spanish banks are carrying their biggest burden of bad loans
since 1994, data showed on Wednesday, fueling doubts on whether
the country's ailing lenders can survive without outside help.
Both Madrid and the European Union have said there were no
plans to provide emergency lending to Spain.
The Bank of Spain on Tuesday approved plans by all 135
Spanish banks to boost capital, but said some may faced
difficulties meeting tough requirements set by the government,
making it almost mandatory for the weaker institutions to fall
into the hands of stronger ones.
As the economy deteriorates, Spanish banks are expected to
need more than the extra 53.8 billion euros ($70.7 billion) in
new capital, the Bank of Spain had predicted. This latest amount
is already an increase on the government's 52 billion euro
estimate in February.
Spain's economy has yet to recover from the bursting of a
long-running property bubble four years ago, and financial
markets fear the combination of private and government debt will
be too great for the country to bear without turning to the euro
zone rescue fund.
Angel Berges, chief executive at the independent Analistas
Financieros, has said that with non-performing loans steadily
rising the banking sector could need a further 50 billion euros
in cash to clean up its balance sheets.
Non-performing loans increased by 3.8 billion euros to 143.8
billion euros in February from January, representing 8.2 percent
of the banks' credit portfolios, Wednesday's data showed.