Spain to force banks to set aside €30bn

11-May (Financial Times) — Spain is to force its banks to set aside a sector-wide €30bn of new provisions against real estate loans or take expensive government aid in the country’s latest attempt at restoring confidence in the stability of its financial sector.

Spain will also use two independent valuations of banks’ balance sheets, as requested by the European Commission, dealing a blow to the Bank of Spain, which has been attacked by the ruling Popular Party for its supervision of lenders during the crisis.

Spanish banks will be asked to split out their real estate-related loans into separate entities, allowing them to be then sold off at market prices, Luis de Guindos, finance minister, said on Friday.

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PG View: If they were to truly mark those real estate assets to market, they will quickly find that €30 bln is not nearly enough. Bandaids and half-measures remain the order of the day…