Spain's bad bank raises 14.1 bn euros

MADRID (AFP) - Spain's "bad bank", key to cleaning up the country's financial system, said on Tuesday it had raised 14.1 billion euros (S$22.8 billion) in funding as it prepared to take on billions in more bad loans.

The sale of the subordinated bonds, along with those placed earlier this month, will help the bank, Sareb, absorb later this week a second batch of bad loans.

Four nationalised banks, including Bankia, transferred 36 billion euros in bad loans to Sareb last month as part of an effort to clean up balance sheets after Spain's property bubble burst in 2008.

Four other troubled lenders are to transfer billions more by Thursday. Three banks, Caja3, CEISS and BancoMareNostrum (BMN) have announced they will unload around 11 billion in problem loans.

Liberbank has yet to announce how much in loans it will transfer.

Sareb is expected to eventually take on 55 billion euros in problem loans and assets.

Spain's euro zone partners insisted on the creation of a bad bank after they agreed in June to provide up to 100 billion euros to rescue the crippled banking system of the region's fourth-biggest economy.

Sareb has received some EU financing, but is attracting most of its funds from private investors.

Sareb takes on loans and assets from banks at a steep discount, opening up the potential for considerable returns in the years to come when the Spanish property market and economy recover.

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