April 27, 2012 / 4:41 PM / in 7 years

Spain banks to bear burden of property losses: gov't source

MADRID (Reuters) - Spain’s banking sector would have to assume the cost of additional losses on real estate assets after they are moved into a special holding company under a new scheme the government plans to activate in the coming weeks, a government source said on Friday.

The government plans to move toxic assets on bank books into a real-estate holding entity or entities by the summer. An independent body would evaluate the assets and later sell them off.

The banks have already drastically written down their property holdings, which are the result of a property boom and bust.

The government source said on Friday that if the assets are sold at an even greater loss than the banks have already recognized, the banking system would have to absorb that additional loss.

Reporting by Julien Toyer and Andres Gonzalez, Writing by Fiona Ortiz

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