In a report on the Spanish financial sector, the International Monetary Fund (IMF) asked openly for public aid and the creation of a "bad bank."
The IMF affirms that Spanish banks can face deteriorating economic conditions, but warns that Bankia needs to be cleaned up urgently in order to preserve stability in the sector.
The Spanish government is expected to create a "bad bank" as soon as it concludes a series of mergers set to take place before the summer. Still, the government is determined not to use this tool in order to avoid public scorn of the need for public funds that it would require.
The "bad bank" is the solution for quickly cleaning up bank balance sheets, reigning in toxic assets and generating the flow of credit to families and companies.
