Spanish banks on track

The EU's executive arm on Tuesday praised Spain for the progress it had made so far in restructuring its ailing banking sector and recapitalizing struggling lenders.

"The reform of the financial sector is on track despite ambitious deadlines, but it's necessary to maintain the momentum in order to overcome still important changes," said an interim report by the European Commission.

Fellow eurozone countries have granted 41.37 billion euros ($53.97 billion) in support of eight lenders and a bad bank to absorb toxic real estate assets.

Catalunya Banc in limbo

Brussels said Spain's access to financial markets had improved in the wake of reforms, with government bond yields declining by more than two percent in the second half of last year.

The Commission stressed that the southern European nation had made big strides concerning the governance of savings banks and supervisory procedures at the Bank of Spain. The report recommended further measures to strengthen public finances and boost growth, including raising the retirement age and increasing environmental taxes.

Spanish Finance Minister Luis de Guindos announced on Tuesday that Madrid would seek a better price for Catalunya Banc, a nationalized lender whose auction was halted by the government because of unsatisfactory offers. The minister said Spain had until 2016 to find a better option for the bank that would minimize the cost to the taxpayer.

hg/pfd (dpa, Reuters, AFP)