Spanish banks 'should work with businesses and government' to solve debt issues

Spanish financial institutions, as well as businesses with unsustainable debt and the country's government, could take lessons from how Iceland handled its banking crisis in 2009.

In an article for The Guardian, professor of economics at the University of Iceland Thorolfur Matthiasson explained all these sectors worked together to formulate a solution that would stabilise the economy and restrict losses.

One of his suggestions is to write off excessive debt that saddles households, enabling them to keep their homes, and ensuring banks do not end up with high levels of Spanish property on their books.

Several of Spain's financial establishments have announced significantly lower profits this year (including Santander, BBVA and Bankinter) as a result of the provisions they've been required to set aside by the government to cover potential real estate losses.

Another of the measures Iceland chose to adopt, Mr Matthiasson stated, was to provide subsidies to low-income families with high-interest mortgages, thereby helping them get back on their feet and remain in their home.

Source: http://www.propertyshowrooms.com/spain/property/news/spanish-banks-should-work-businesses-government-solve-debt-issues_312333.html

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