Spanish savings banks struggling to find private cash as part of new recapitalization rules will have access to state-backed funds from March, the economy ministry said on Sunday.

The mostly unlisted savings banks, highly exposed to a crashed property market, were ordered on January 24 to raise core capital levels by attracting private investors by September or face state intervention.

El Pais reported the plan had been criticed because some weaker banks would be unable to survive the nine-month grace period without government help, prompting the government to bring the offer of support forward to March.

The option to apply for help earlier than September was always an option, an economy ministry spokesman said. This has always been the case. The time limit is September, but if capital is needed before then, it will be available, she said.

The bank restructuring fund has so far pumped just over 11 billion euros ($15 billion) into savings banks to ease an overhaul of the sector in which consolidation has seen the number of banks fall to 17 from 45 in under six months.

The fund has available capital of up to 99 billion euros.

Economy minister Elena Salgado has said she did not expect the system to need more than 20 billion euros in total, less than most analysts estimate.

The second round of sector restructuring has been led by the largest savings bank, La Caixa, which recently said it would list its banking business via its holding company Criteria


Many of the savings banks were expected to attempt to follow La Caixa's example in a quest to shore up core capital and avoid partial nationalization.

(Reporting by Paul Day; Editing by Daniel Magnowski and Dan Lalor)