Spanish savings banks have requested increased government aid to avoid systemic risk and “dramatic consequences” from the global financial crisis.

Spanish savings banks on the verge of collapseThe Spanish savings banks, which hold around 50 per cent of Spain’s lending business are under intense pressure with a surge in delinquent loans amid the collapse of the Spanish construction sector.

The Spanish Confederation of Savings Banks (CECA), which represents the unlisted institutions with close links to regional governments, said the government was underestimating the size of the crisis by relying on a small deposit fund to solve possible problems.

CECA’s president Juan Ramon Quintas, has said that “If things get bad, and the necessary measures are not taken to avoid it, we could be entering a systemic risk so dramatic that I prefer not to even comment on it”.

Image by jcorrius under Creative Commons.