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Spanish 'bad bank' to be public-private entity

Spain's Economy Minister Luis de Guindos has told parliament that the ownership of the "bad bank" being set up to absorb sour Spanish estate assets will be split 55- to-45 between private investors and the state.

epa03090380 Spanish Economy Minister, Luis de Guindos, answers a question during the press conference he gave with the Deputy Prime Minister, Soraya Saenz de Santamaria (not in the picture), after the Cabinet's meeting, in Madrid, Spain, 03 February 2012. EPA/Angel Diaz +++(c) dpa - Bildfunk+++ dpa 29364149

Luis de Guindos

De Guindos warned parliament on Wednesday that many of the assets hit since the collapse of Spain's real estate market in 2008 had only "very conservative" residual value, but could eventually deliver a profit.

The asset management society, euphemistically called a "bad bank," which was given the green light by Spain's parliament in August, is due to begin operating in December. Its creation was part of a deal under which the EU would deliver bailout funds to Spain's ailing banking sector.

De Guindos (r) walks alongside his German counterpart Philipp Roesler in Madrid, October 3, 2012. Photo: REUTERS/Emilio Naranjo/Pool

Rösler told Spain that Germany will not hinder eurozone aid

Such eurozone capital injections would help troubled banks, said de Guindos, adding, however, that 70 percent had passed a stress test last week.

So far, Spain has said it would only need 40 billion euros out of up to 100 billion euros pledged by the eurozone for the Spanish banking sector.

Visiting Madrid on Wednesday, German Economics Minister, Philipp Rösler said Germany would not oppose a Spanish application, should Spain apply for a wider eurozone financial rescue involving bond-buying by the European Central Bank (ECB), according to the German news agency dpa.

"We are not slowing it down," Rösler said, adding that Spain was held in "high esteem" in Germany.

Spainleaves option open

De Guindos replied that Spain had not decided on such a move. "The government would decide on the best possible option," he said.

anbei ein Bild vom EU-Finanzministertreffen auf Zypern. Falls Sie keine Agenturbilder finden, nehmen sie bitte das. Wolfgang Schäuble, Bundesfinanzminister, Pressekonferenz beim EU-Finanzministertreffen in Nikosia auf Zypern. Aufgenommen am 15.09.2012. Foto: Bernd Riegert DW

In Cyprus, Schäuble said German patience on bailouts was limited

Spainand other troubled eurozone countries have an offer from the ECB that it would buy bonds from to help them keep their costs of borrowing in check.

In mid-September German Finance Minister Wolfgang Schäuble had warned eurozone colleagues at a ministerial meeting in Cyprus that Germany via its parliament was increasingly reluctant to contribute to more bailouts.

On Wednesday, the leader of Spain's trade union confederation UGT, said he expected the Spanish government to seek the rescue shortly if Germany gave the green light, according to dpa.

ipj/rc (dpa, Reuters, AP)

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