Op-ed: Penury in the Spanish banking sector

Banks have lost money in Spain. That is what Q3 2011 data from the supervisor confirmed in a recent publication, which showed that last summer banks and savings banks were hit with 780 million in losses.

The gradual and continual decline of banking business is due to weak earnings, financing challenges and the heavy toxic assets. The triad of difficulties demands quick and precise financial reform, which could help avoid further losses in the sector.

It is critical to clean up the financial system and avoid committing more errors. The clean up should last one year and no more, although to meet this goal would require a system of state-funded aid and letting some banks fail. Doing so will put banks back in a position to provide credit.