Spain to overhaul savings banks

Posted by on May 6th, 2010 and filed under Business/Economy, International, Politics. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Madrid, May 6 (IANS/EFE) Spanish Prime Minister Jose Luis Rodriguez Zapatero and opposition leader Mariano Rajoy have agreed to overhaul the law regulating savings banks and to promote mergers aimed at consolidating the sector.

Rajoy, head of the conservative Popular Party, announced the pact Wednesday after more than two hours of talks with the premier at Madrid’s Moncloa Palace.

The accord sets a three-month deadline for reforming regulation to ‘guarantee the independence’ of savings banks directors and to expedite mergers, the PP leader said.

The one-on-one meeting between Rajoy and the Socialist prime minister came a day after the Spanish stock market plunged 5.41 percent on fears Madrid could fall victim to the same kind of financial pressures that have forced debt-laden Greece to seek aid from the European Union and the International Monetary Fund.

Rajoy said he told Zapatero the PP supports EU and IMF help for Greece as the best way to support both the euro and Spain.

The PP chief said the time has come to restructure Spain’s financial system, which weathered the initial global crisis better than those of some other countries, but now faces problems from an increase in non-performing loans.

‘There is no credit for firms and for families, and without credit, there is no investment. And without investment, there is no employment,’ Rajoy said. ‘For credit to return, we have to reorganize the financial system, capitalize it and restructure it.’

Spain’s unemployment rate stands at more than 20 percent, the highest in the 27-member EU.

To emerge from recession, Spain must reduce the budget deficit, restructure the finance sector and overhaul labour laws, Rajoy said.

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