MADRID (AP) — The Spanish government on Friday approved a reform of the savings banks sector, a network of unlisted regional institutions which had come under severe pressure during the debt crisis.
Under the measures approved by decree, savings banks will be able to cede as much as 50 percent control to private investors and regional governments will no longer be able to appoint elected officials to the banks’ controlling boards.
The new law will require that at least half of each entity’s board be experienced and professionally qualified.
Deputy Prime Minister Maria Teresa Fernandez de La Vega says the reform will "strengthen our already healthy banking system."
In recent months, markets have been worried about Spain’s banking system, particularly its savings banks — or "cajas" — which were heavily exposed to the collapsed real estate sector and are saddled with billions of euros in foreclosed property.
Under pressure from the government, about half of the nation’s 45 savings banks have merged in recent months or are in talks to do so.
Finance Minister Elena Salgado said the measures would modernize the banking sector and make it more efficient.
She denied the reforms had come too late and said that although they were still enduring a rise in bad loans, most of Spain’s savings banks had survived the worst part of the economic crisis.
The reform comes less than two weeks before the publication of EU-wide stress tests of banks, which simulate the impact of severe market conditions on banks. Salgado said the results would "show that our banks are solvent."
