Only the largest of Spain’s merged savings banks or cajas are likely to succeed in raising capital through stock market offerings because of uncertainty about corporate governance and the value of property assets, according to Madrid investment bankers and senior commercial bank executives, the Financial Times reported. Banks and cajas have been given until Monday to tell the Bank of Spain how they intend to raise new capital.

Spain is redoubling its efforts to lower the country's chronically high unemployment rate and labor costs this month, under intense pressure from the European Union and international investors, The Wall Street Journal reported. The reform received new impetus from an EU agreement last week on measures to boost employment, competitiveness and budget discipline among euro-zone countries.

Spain's central bank said the country's lenders will need €15.15 billion ($21.07 billion) in new capital, but Moody's Investors Service published a far higher estimate that spooked markets and called into question the credibility of Spain's figures, The Wall Street Journal reported. The Bank of Spain's disclosure on Thursday, aimed at providing a new yardstick for the cleanup of the country's ailing banks and shoring up investor confidence, was overshadowed as Moody's downgraded its rating on Spanish government debt to Aa2 with a negative outlook, from Aa1 previously.

Klaus Regling, the chief executive of the European Financial Stability Facility (EFSF), has said he does not expect Portugal or Spain to ask for bailouts, the Irish Times reported on an Austrian state radio ORF story. “At the moment it looks like Ireland will be the only country to have tapped the EFSF,” Mr Regling said. “I don’t see any need at all any more for Spain” to take money, he said, adding that “Portugal still has to do some work”. While the EFSF would have sufficient funds for additional bailouts, giving funds “currently doesn’t look necessary”, he said.

Spain's central bank said the country's ailing savings banks are holding about €100 billion ($136.86 billion) in "potentially problematic" real-estate assets, the first time it has put a number on the extent of those holdings, The Wall Street Journal reported. The figure was disclosed as the head of the Bank of Spain voiced support for the government's plan to boost the solvency levels of those banks, known as cajas.

Despite complaints from Spain's ailing savings banks that reform efforts are moving too swiftly, the Spanish government is standing firm in its push to quickly convert the local institutions into traditional banks, according to people familiar with the matter, The Wall Street Journal reported. The government's new solvency decree will firm up a set of ambitious overhauls announced by Spanish Finance Minister Elena Salgado last month.

Big-name bidders are circling a $640 million portfolio of soured Spanish commercial-real-estate loans, the latest sign of how private-equity firms are still trying to take advantage of the property bust even as the global economy recovers, The Wall Street Journal reported. Morgan Stanley, which is handling the sale for Royal Bank of Scotland Group PLC, received a handful of initial proposals at the end of last week, a person familiar with the situation said Tuesday.

Banco Financiero y de Ahorros SA, Spain's third-largest bank by assets, will set aside €9.2 billion ($12.52 billion) to cover loan losses and write down the value of its real-estate holdings, illustrating the ongoing fallout from the country's property bust, The Wall Street Journal reported.

A second group of Spanish savings banks says it has begun work to merge operations and establish a new bank following pressure from the government for the troubled sector to raise more capital and reveal its exposure to bad debt with greater transparency, Bloomberg reported on an Associated Press story. Unnim, a Catalan-based group formed by Caixa Manlleu, Caixa Sabadell and Caixa Terrassa — all savings banks or "cajas" — said in a statement late Friday its board has agreed to begin the process of creating a listed bank.

Spain's unemployment rate soared back above 20% in the last three months of 2010 as more than 138,000 jobs were lost, casting doubts about the strength of the ongoing recovery in the euro zone's fourth-largest economy, data released Friday by the country's statistics institute INE shows. Fourth-quarter unemployment stood at 20.3%, up from 19.8% in the third quarter, and the highest level since the second quarter of 1997, when it was at 20.7%. The third-quarter decline had been the first since the rate started a continued rise in the second quarter of 2007, from well below 10%.