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| Spain creates 'bad bank' for toxic property assets | Spain creates 'bad bank' for toxic property assets |
| (35 minutes later) | |
| The Spanish government is creating a "bad bank" into which all the toxic property assets of its debt-laden banking sector can be off-loaded. | The Spanish government is creating a "bad bank" into which all the toxic property assets of its debt-laden banking sector can be off-loaded. |
| The move is aimed at helping the country's troubled banks draw a line under the debt crisis and move on. | The move is aimed at helping the country's troubled banks draw a line under the debt crisis and move on. |
| The Bank of Spain will assess the value of the assets being transferred into the "banco malo" and the banks will receive cash, debt or shares in return, said economy minister Luis de Guindos. | The Bank of Spain will assess the value of the assets being transferred into the "banco malo" and the banks will receive cash, debt or shares in return, said economy minister Luis de Guindos. |
| The bad bank could last 10 to 15 years. | The bad bank could last 10 to 15 years. |
| The "rotten assets" being off-loaded must have a value that allows the bad bank to make a profit in the long-term, said Mr de Guindos after a cabinet meeting. | The "rotten assets" being off-loaded must have a value that allows the bad bank to make a profit in the long-term, said Mr de Guindos after a cabinet meeting. |
| Bad debts | |
| In June, Spain requested 100bn euros ($122bn; £79bn) of loans from the European Financial Stability Facility bailout fund to help support its banks, which are struggling with bad debts from loans made in the property sector. | |
| The value of bank loans at risk of not being repaid is estimated to be 156bn euros. | |
| But Spain's eurozone partners have said any bail-out loans must be accompanied by economic reforms. | |
| In July, Madrid announced additional spending cuts and tax rises worth 65bn euros. | |
| But the government is still struggling with high borrowing costs and a flatlining economy mired in a double-dip recession. | |
| On 29 August, the debt-laden region of Catalonia asked the government for a bailout of 5bn euros. | |
| Meanwhile, unemployment in the country is running at nearly 25%, the highest in the European Union. |