Spanish Business News

Spanish Prime Minister-elect Mariano Rajoy has asked for at least two papers from academics on how to create a so-called bad bank, according to two people with knowledge of the matter.

Both proposals outline mechanisms for a state-backed agency to buy soured assets such as real estate from banks at a discount, said the people, who declined be named because the process isn’t public.

According to one of the proposals, Spain needs external financing of about 100 billion euros ($133 billion) to absorb the cost of transferring assets to the bad bank and should seek it from the European Financial Stability Fund or the International Monetary Fund, one of the people said. Both options call for valuations of real estate to be made by independent appraisers, the people said.

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