Santander sets aside €2.7bn for clean-up provisions
Spain’s Banco Santander has announced it will set aside €2.7bn to comply with the request by the Spanish government for lenders to boost provisions on real estate.
On May 11, the government released a plan to clean-up the banking system. Under the plan, banks have to set aside an additional €30bn in provisions against real estate exposure, on top of the €54bn in of charges and capital ordered by the government in the previous clean-up effort in February.
Additional provisions would cover potential losses on €123bn of real estate-linked lending.
In a statement released on May 13, Santander confirmed it still has €2.3bn in provisions pending from February and plans to fully absorb the total €5bn euros during the year.
The request follows the announcement last week that the Spanish government has taken control over Bankia SA, one of the country’s biggest banks by assets, reported to have a €32bn exposure to toxic real estate assets, including loans at risk of default and repossessed properties from bankrupt borrowers.