Spanish banks will set aside a total of 53.8 billion euros ($71 billion) to meet new rules on real estate, the Bank of Spain said, as it pledged to tighten vigilance over lenders struggling to meet the requirements.
Lenders will take provisions of 29.1 billion euros and create a capital buffer of 15.6 billion euros, after making “extraordinary writedowns” of 9.19 billion euros at the end of last year, the Bank of Spain said today in a statement released in Madrid. The government previously estimated that the total would be about 52 billion euros.
Spain’s government passed a decree in February that forced banks to recognize deeper losses on the real estate piled up on their books since the collapse of the property boom in 2008. The government is seeking to restore investor confidence in Spain and its lenders by boosting banks’ capital requirements.
“The cleanup required by the new Royal Decree-Law has already been or will be carried out by most credit institutions without major difficulty,” the Bank of Spain said. In other cases compliance will be “more exacting but reasonably likely to be met,” it said.
In those cases, the Bank of Spain will “tighten monitoring” of the lenders and has told them to take extra contingency measures, it said, without naming any companies.
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