NEW YORK ( TheStreet) -- Spain will partially nationalize its weakest savings banks to cool investor concerns over sovereign debt.

The state-backed bank restructuring fund called Orderly Bank Restructuring Fund (FROB) could take stakes in the banks that cannot raise capital from private investors, a source told Reuters.

A presentation to investors from FROB says this could be done using the fund if some of the 17 savings banks are unable to raise capital themselves. Under the plan the banks would become conventional banks with stock market listing and would have five years to repurchase shares or seven years if they file for an extension.

Spain has been restructuring its savings banks that were heavily invested in real estate loans. Forty banks are participating in the process and only five banks have not been involved, according to the report. Santander ( STD) or BBVA ( BBVA) are two banks that have been able to handle losses due to real estate loans.

"The government is preparing a plan to accelerate the restructuring of the financial system, primarily the cajas," Government spokesman Alfredo Perez Rubalcaba said according to The Wall Street Journal.

--Written by Maria Woehr in New York.

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