(MENAFN- Qatar News Agency) Spain has made important progress in reforming problem-ridden parts of its banking sector, even if it still needs to monitor the sector's shock resiliency and solvency, the European Commission and the European Central Bank said Monday.
The report assessed Spain's ability to meet targets agreed under a financial assistance programme for its banking sector, which was granted 41 billion euros (56 billion dollars) by the eurozone in 2012 and 2013. Spain is due to exit the bailout programme in January, dpa reported
A drop in sovereign bond yields and a rise in share prices have improved financing conditions for the economy, even if those conditions remain "more challenging" for small and medium-sized companies, the EU and ECB said. The liquidity situation and the financing structure of the Spanish banking sector have improved, and the sector has a "comfortable" solvency position after parts of it were recapitalized and distressed real estate assets were transferred to the bad bank known as Sareb, according to the report
A process of restructuring banks having received state aid and an overhaul of banks' governance and regulatory framework are well under way, the report added. However, heavy debt burdens continue to weigh on lending to the private economy, and the adjustment of the real estate market is not yet completed, the EU and ECB warned
Spanish banks were left burdened with toxic real estate assets after the country's key property sector collapsed during the global crisis, plunging Spain into a six-year economic slump. Spain emerged from recession in the third quarter and is expected to achieve a growth rate of at least 0.5 per cent in 2014
However, the 26-per-cent unemployment rate will only go down very slowly, according to Spanish and commission forecasts.
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