Spain sets $118 billion limit for bad bank

  • Spain has set a $118 billion limit for the size of a bad bank created to take over other the real estate assets of other lenders.

    Lenders will transfer foreclosed property and unrecoverable loans to house builders to the bad bank, to be called Sareb.

    The final size of Sareb, which is expected to be up and running by the end of the year and exist for 15 years, will likely be less than the $118 billion limit, Economy Ministry sources said on Wednesday.

    The move is seen as a necessary step in order to receive European funding for the sector.

    Spain is currently preparing to obtain the first funds from a $131 billion credit line agreed with Europe in June.