Spain pushes banks to present merger plans by May 30

Feb 2, 2012, 18:08 GMT

Madrid - The Spanish government on Thursday encouraged banks to merge, saying lenders with such plans must present them by May 30.

The industry needs to set aside a total of 50 billion euros (66 billion dollars) to cover toxic real estate assets, Economy Minister Luis de Guindos said.

The assets were left over from the previous housing boom, which collapsed during the global economic crisis.

Banks which merge have two years to set aside extra provisions to cover the toxic assets, while those who do not merge only have one year to do so, de Guindos said.

Banks can get further loans from the bank restructuring fund FROB, set up by the previous Socialist government, which will be stocked up from 9 to 15 billion euros.

Prime Minister Mariano Rajoy's government, which took power in December, has pledged financial reforms at no cost to the taxpayer. The reforms are part of the government's efforts to stabilize Spain's economy and to cut the budget deficit.