EU: Almunia sees Spanish banks stabilised by mid-2013

Spain's banks, hit by a property crash that has prompted a government-forced clean-up of toxic real estate assets, should be fully capitalised by the middle of next year, the European Union's antitrust chief said on Monday.

The rescued banks will need to overhaul businesses, reduce balance sheets, halt dividend payouts and refrain from acquisitions, in return for EU regulatory approval of state aid granted under the government's bailout.

The measures will put Spanish banks back on the track to financial health, EU Competition Commissioner Joaquin Almunia said.

"The whole Spanish financial system will be fully capitalised by mid-2013 at the latest," Almunia said in the text of a speech to a conference in Barcelona.

EU regulators would clear restructuring plans for lenders Bankia, Catalunya Caixa, Nova Caixa Galicia and Banco de Valencia by the end of November, he said.

Almunia also said he expected a recapitalisation plan from Banco Popular and possibly other banks by the end of this month. That group would have until June next year to implement their schemes.

The Commission expects to approve revamp plans for CEIS, BMN, Liberbank and Caja3 by the end of the year, Almunia said. The four lenders failed to reach a Core tier 1 capital ratio of 9% in a recent stress test.

The Spanish government has set up a bad bank, to be called Sareb, which will take over damaged assets from lenders as part of the restructuring of financial services.