Spain: "Bad bank" to be 55 percent private-owned

PHILIPPE HUGUEN/AFP/GettyImages

MADRID - Spain's Economy Minister Luis de Guindos says a 'bad bank' being set up to allow lenders to offload bad investments will be 55 percent privately-owned.

Speaking Wednesday in Parliament, De Guindos says the stake in the bad bank would be offered to private sector companies, who might hope to turn around the bad investments and eventually make a profit.

De Guindos defended Spain's banks, saying an independent audit last week showed "70 percent of the financial sector is in condition to handle a severely stressed situation."

The audit said seven banks hardest hit by the 2008 collapse of the property market will need another 59.3 billion euro ($77 billion) to survive a severe downturn.

The minister says Spain will tap a "greatly inferior" amount from its 100 billion euro eurozone rescue loan.

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