Spain's Council of Ministers will meet on Friday and are expected to approve a law by decree on the protection of financial product owners such as preference shareholders.

Also planned is an intellectual property law that will toughen measures against online piracy.

Under the new law, financial entities are expected to make an extraordinary contribution to the banking system's Deposit Guarantee Fund in order to provide liquidity for preference shareholders of Novagalicia Banco and Catalunya Banc, the Spanish press reports.

According to financial sources cited by Spanish daily ABC, financial entities are expected to contibute between €1.6 and €1.9bn.

Also on Friday, the country's Fund for Orderly Bank Restructuring (known as FROB in Spanish) is expected to establish the conversion rate for preference shares. The fund's Commission, with representatives from the Finance Ministry and the Bank of Spain, plan to apply a haircut on preference shareholders and subordinate debt holders of the nationalized entities.

The Commission also plans to hire an external advisor in order to create a holding company for Novagalicia Banco, Bankia, and Catalunya Banc. Bankia President Jose Ignacio Goirigolzarri is expected to head the holding company.

SB

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