THE EUROPEAN Central Bank, EU and International Monetary Fund (IMF) yesterday reported good progress in turning around the troubled Spanish banking sector, which was bailed out a year ago.
The three institutions, together known as the Troika, allowed the industry to take up to £100bn from a communal bailout pot, on the condition that they restructure the sector and turn around its fortunes.
“Most notably, actions to recapitalise parts of the banking sector and the asset transfers to Sareb [Spain’s bad bank] have provided an important boost to the system’s liquidity and solvency,” said the IMF.
“At the same time, financial market sentiment has continued to improve since the last monitoring mission, with the risk premium on Spanish sovereign debt now well below its levels at the start of the programme.”
However, it also warned that the progress could be thrown off track if the country’s recession deepens further.
Additional steps to reduce this risk include implementing a euro-wide banking union, raising banks’ capital levels without hitting lending, and closer monitoring of the sector, the IMF said.