Bank of Spain to get extra rescue powers
Spain is studying the possibility to grant to its central bank new powers to intervene more rapidly to rescue troubled lenders via the country’s bank rescue fund set up by the government.
According to press reports, new powers will allow the Bank of Spain to take over banks that don’t comply with liquidity and solvency requirements.
Under the new regulation, the Bank of Spain will also be able to formulate debt restructuring agreements with creditors on the banks’ behalf and remove top officials from their posts.
Actions would have to be approved by the country’s bank rescue fund, the FROB, which would receive quarterly compliance reports.
The new regulation would help the country to meet conditions set at European level to allow Madrid to cash in a eurozone bailout of up to €124.7bn, expected to be approved at the end of August.
Spain’s government has already rescued Bankia, CatalunyaCaixa, NovaGalicia and Banco de Valencia and the results of a stress test on the 14 biggest banks of the country are due to be published in September.