Spains Economy Minister Pedro Solbes said on Friday there was a chance some Spanish banks might need to be recapitalised. Spains financial system has so far survived the crisis without rescues or nationalisations but is facing rapidly rising defaults as unemployment rises in the wake of a collapsing property boom.
"There have been bank recapitalisations in some other countries, and its possible there are in Spain as well," Solbes said. The government says it expects consolidation but wants banks requiring capital to turn first to the privately-funded Deposit Guarantee Fund. However, holding only 7.2 billion euros ($9.27 billion), many commentators feel that the government will end up having to put some money into recapitalisation.
Economy Secretary David Vegara said earlier this week that two regional savings banks considering a merger, Unicaja and Caja Castilla La Mancha, should consider using the Deposit Guarantee Fund if necessary. A number of other savings banks have said they are considering mergers.