The Bank of Spain hopes to finish pricing the toxic assets that will be transferred to the 'bad bank', according to the Spanish financial daily Expansión.

As part of its financial sector restructuring, Spain is currently creating the so-called 'bad bank', which is a financial institution that purchases other banks' non-performing assets at market prices. The point is to shift toxic assets off the balance sheets of banks.

According to the newspaper, the central bank has decided to apply an additional 10% discount to the prices as evaluated in the independent auditor Oliver Wyman's projected losses for loans and an additional 7% on the assets. The projected losses according to the Wyman report were the following:

- Land: 83%.
- Development in progress: 67.5%.
- Commercial: 49.5%.
- New housing: 57%.
- Second-hand housing: 51%.

The above figures are the amounts calculated for the base-case scenario and the Bank of Spain is applying the additional discount which implies a more adverse economic scenario. The monetary authority hopes to close discussions on the asset prices today.

MG

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