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Spain Cabinet approves banking sector reform plan
Story Filed: February 3, 2012, 8:38 am
AP News Reporter
news@k105.com
Associated Press

MADRID (AP) — Spain's government has approved a plan forcing banks to set aside an estimated €50 billion ($65 billion) more in provisions to cover toxic real estate assets.

The move is key to restructuring the financial sector and reviving a lame economy.

The Cabinet passed the plan Friday, a day after Economy Minister Luis de Guindos unveiled it. It will be sent to Parliament for a yes-or-no vote with no amendments.

A key part of the plan is to force banks to be up-front about the value of their property assets. Their book value is widely seen as inflated following the collapse of a real construction boom.

Banks will be under pressure to shed holdings such as land and foreclosed or unsold homes, and sell them at market prices.