Spanish banks told to find €50bn Luis de Guindos, Spain's economy minister Spanish banks must find €50bn ($66bn) from profits and capital this year to finance a clean-up of their balance sheets or agree to merge with another bank by May to gain an extra year's grace, according to Luis de Guindos, Spain's economy minister. Outlining the new centre-right government's first big reform programme, Mr De Guindos said on Thursday that the aim of the rapid "one-off" clean-up of bad property loans was to "increase the confidence and credibility of the Spanish financial system." That would make it easier for banks to access international wholesale finance markets again and so improve the flow of credit to increase growth and create jobs. Mr De Guindos said no public money was being used. However, banks that needed state help would be able to apply for high-interest loans from the Fund for Orderly Bank Restructuring (Frob). Bankers say the Frob will charge 8 per cent interest. The Frob's capital is being raised from €9bn to €15bn by the state, and it has the power to deploy up to €99bn by borrowing money on its capital. Some big banks such as Santander and Caixabank have already set aside billions of euros in extraordinary provisions in their 2011 results to help cover bad Spanish loans after Mr De Guindos first mentioned the €50bn plan in a Financial Times interview a month ago. Bankia - which was formed out of Caja Madrid and six other savings banks and is particularly burdened with bad property assets - has not yet worked out how to deal with the new provisioning requirements set to be approved at a cabinet meeting on Friday. Banco Financiero y de Ahorros (BFA), the "bad bank" that controls the listed Bankia, said the BFA-Bankia group would meet the new requirements, partly by selling non-strategic assets. Bankers and analysts estimate that Bankia would need to come up with €5bn-€7bn of the €50bn in extra provisioning requirements for the whole financial sector. Led by Rodrigo Rato, a former finance minister and head of the International Monetary Fund, Bankia has delayed its announcement of its 2011 results by three weeks to February 24. It is under pressure from Spain's new government to seek a merger with a stronger partner such as Caixabank. Mr De Guindos declined to comment on Bankia. The new rules will increase provisioning requirements for Spain's €175bn of bad and doubtful property assets, including repossessed buildings, from about €50bn to €90bn. Of that €40bn, some €25bn is to be provisioned from bank profits and the remaining €15bn will be in the form of an extra "capital cushion" raised by other means. About half of the problem assets are in the form of low-value land, where provisioning will increase from 31 per cent now to 80 per cent by the end of the year. For unfinished buildings, provisions rise from 27 per cent to 65 per cent, and for completed homes from 25 per cent to 35 per cent. In addition, the rules demand a new 7 per cent provision costing more than €10bn for the approximately €160bn of property loans that are not currently classed as bad or doubtful. Spain's financial sector has already undergone one round of drastic restructuring since the start of the financial crisis in 2008, with the number of savings bank groups cut from 45 to 13 and banks setting aside €66bn in extra provisions between 2008 and mid-2011. The economy ministry said the next phase would produce "a more robust financial sector, with fewer but stronger institutions."