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Spanish banks must remain cautious warns EC
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INTERNATIONAL creditors who bailed rescued Spain’s tottering banks said Monday the sector was on the way to recovery but warned Madrid to be vigilant as the bailout winds up.
The European Commission said bank restructuring was well under way following the injection of state capital, and efforts under the programme have made the system stronger, safer, and leaner.
They warned, however, that lending to businesses had yet to pick up as economic risks remain for Spain, despite emerging from recession in the third quarter of this year.
Spain was urged to meet its tough financial targets and push on with reforms to ensure a return to growth, while monitoring the recovering banking sector carefully.
Completing the reform agenda will be “imperative” to return the economy to sustainable growth, the commission said.
“Continued in-depth diagnostics of the shock resilience and solvency of the Spanish banking sector remain vital” as they clean out their bad assets, it added.
Spain has drawn €41 billion from a €100 billion credit line offered by the EC and the International Monetary Fund in July 2012 which expires at the end of January.
The banks were laden with bad loans from a real estate crash in 2008, which threw the euro zone’s fourth biggest economy into a double recession and left millions jobless.
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