Spain's parliament on Thursday approved the creation of a "bad bank" that would hold toxic real estate assets in a bid to secure up to $130 billion (100 billion euros) in eurozone aid for the country's ailing lenders.
The reform was approved with the votes of Prime Minister Mariano Rajoy's conservative People's Party (PP), which has an absolute majority in parliament, and of the Catalan nationalist coalition CiU.
Spanish banks hold more than 300 billion euros in real estate assets, including about 180 billion euros in toxic assets in the form of housing, land and loans following the meltdown of the country's property bubble four years ago.
Economy Minister Luis de Guindos said the "bad bank" would be in place in December and would see state's involvement limited to a maximum 50-percent stake, the minister explained.
The reform also requires banks to increase their core capital ratio, from 8 per cent to 9 per cent. It boosts the powers of the bank restructuring fund, FROB, and includes mechanisms for the early detection of problems at banks.
A key report on the capital needs of Spanish banks by consulting company Oliver Wyman will be made public in the end of this month, Guindos said.
Banks could start receiving eurozone funds in early November, once the European Commission approves their restructuration plans, he said.
The reform is designed to meet conditions set by the eurozone, which has pledged to inject up to 100 billion euros into the Spanish banking sector.
The opposition disputes government claims that the reform will not cost money to taxpayers. Rafael Larreina of the Basque separatist party Amaiur argued that it will lead to more cuts in social spending and more unemployment, without solving the country's economic crisis. Spain has an unemployment rate of nearly 25 percent.
The reform is the third of the financial sector undertaken by Rajoy's government since it assumed power in November.
Spain is seeking to ensure the solidity of its banking sector in an attempt to reassure financial markets and ward off an international bailout.
The reform approved on Thursday also includes measures for the protection of small investors who might mistakenly buy high-risk financial products.
The National Stock Market Commission (CNMV) said earlier that it will fine banks that sold such products to thousands of pensioners and small-time savers without adequately informing them of the risks involved.
Julio Segura, president of the stock market watchdog, said it was in the process of opening disciplinary proceedings against 11 of the 19 banks that issued so-called preferential shares.
The scandal has sparked street protests by people who invested a total of about 30 billion euros in preferential shares and related products.
Savers were told they were making safe investments that would earn them an interest rate of up to 7 percent. Many of the investors have now lost a large part of their money, or are unable to access it.
Consumer associations say hundreds of thousands of people have been affected.
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