The bursting in 2008 of a real estate bubble that powered the economy for more than a decade has saddled banks, particularly Spain's savings banks or 'cajas', with enormous amounts of bad loans. The country's central bank, the Bank of Spain, says the sector is still burdened with about â¿¬175 billion ($230 billion) in "problematic" real estate holdings. There are concerns that, as Spain's shrinking economy takes its toll on the banks, the government and possibly international lenders will be forced to step in and rescue the banks.The government has already been pushing the lenders to strengthen their finances by merging and has introduced rules that require banks to set aside an estimated total of â¿¬50 billion ($65.7 billion) more in provisions by the end of the 2012 to cover their toxic real estate assets.
Statistics Office Confirms Spain Back In Recession
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