MADRID (AP) — Spain's prime minister said Sunday that his government was prepared to continue backing the country's savings banks but called on private investors to step forward in the troubled sector.
Jose Luis Rodriguez Zapatero said it was his government's duty to take charge of ensuring prudent recapitalization of savings banks or "cajas."
"We take charge of events, of course, because it's our duty, but everything has a reasonable limit," Zapatero said. "We want cajas to receive private money from private investors so that they become more solvent and have a greater capacity to offer credit to help companies and families, and so that the economy may move forward and recover more quickly."
Zapatero's statement followed media reports that Spain's government could step in early to provide funds for savings banks unable to raise enough private finance to comply with new recapitalization requirements.
The state could make money available as early as March by buying shares in struggling savings banks of "cajas," leading newspaper El Pais reported Sunday, citing unnamed sources close to the process.
Finance Minister Elena Salgado on Jan. 24 announced the government was to require cajas to raise core capital levels of between 9 and 10 percent by September, a hike from the 6 percent capital ratio requirement they have been operating on.
El Pais said Sunday that cajas could request funds once they presented their 2010 audits on Feb. 28.
No one in government was immediately available for comment on the March date.
Two groups of Catalan regional cajas said last week they were planning to launch fully listed commercial banks in a bid to avoid the government buying their shares in what would be a partial nationalization.
La Caixa and Unnim — a group formed by Caixa Manlleu, Caixa Sabadell and Caixa Terrassa — have both said they aim to list their banking businesses.
The Bank of Spain has invested €15 billion ($20 billion) in re-capitalizing the cajas through the Fund for Orderly Bank Restructuring, a mechanism set up to aid such institutions.
So far it has had to bail out two failed cajas, Caja Castilla-La Mancha and CajaSur, and many of the rest have been obliged to undergo a government-mandated merger process that has reduced their number from 45 to 17.
Spain's large international banks, led by Banco Santander, S.A. and Banco Bilbao Vizcaya Argentaria S.A., have been posting profits and have withstood the international crisis thanks to strict regulations that had required them to set aside provisions during good times, as well as timely incursions into Latin American markets that have ridden the recession better than much of Europe.
Zapatero said his government would also press ahead with labor reforms following a recent agreement with employers and trade unions to extend the retirement age from 65 to 67.
"We need labor reform because our labor market is inefficient and generates too much short term employment," Zapatero said.
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