Four Spanish saving banks with more than 135 billion euros in assetsare intending to merge to dilute risks as they suffer from toxic property and mortgage loans. The combination of the four banks is urged from bank of Spain that wants to prevent the collapse of these banks which widened their lending during the expansion of the housing sector in 2008.

The announcement came yesterday after a saving bank that suffers from property loan defaults in Cordoba, CajaSur, shifted from the Catholic Church control to be state owned. Problems increase in Europe as banking system instability coincided with the huge deficit prevailing in the region which triggered the launch of $1 trillion bailout to highly indebted countries.