Bank of Spain may rescue more lenders

Agence France-Presse

"If the international crisis is prolonged, it almost certainly will be necessary to restructure some small and medium sized institutions," Bank of Spain governor Miguel Angel Fernandez Ordonez said at a conference.

"We should prepare ourselves to use more public resources than on previous occasions," he said.

The Bank of Spain on Sunday took control of regional savings bank Caja Castilla La Mancha (CCM), replacing its directors with its own nominees and providing up to 9 billion euros (12 billion dollars) in liquidity.

CCM, which accounts for less than 1 percent of the assets of Spain's financial system according to the government, opened for business as normal on Monday and there was no rush by its clients to withdraw deposits.

Unlike in Britain and other European countries, no Spanish bank has been formally nationalized due to the global financial crisis, in large part because tight regulations protected them from US high risk or "sub-prime" assets.

But Spanish banks are facing a rapid rise in non-performing loans as unemployment swells following the collapse last year of a decade-long property boom that had been a key driver of economic growth.