Qatar to invest in Spanish savings banks: Spanish PM

MADRID: Qatar plans to invest 300 million euros in Spain's cash-strapped regional savings banks, Spanish Prime Minister Jose Luis Rodriguez Zapatero said Monday during a visit to the gas-rich Gulf state.

Spain's 17 regional savings banks, known as cajas, are under pressure from Zapatero's government to find more cash from investors as he seeks to stamp out fears of an Irish-style EU-backed bailout.

Earlier this month the government said unlisted savings banks, weighed down by loans that turned sour after the collapse of a housing bubble in 2008, must raise their core capital ratios to 10 percent of total assets from the current six percent.

The cajas have until March 2012 to meet the new ratio if they want to avoid a partial nationalization but so far their has been little investor interest in the regional savings banks.

"We have received very good news, the Qatari funds, the most powerful sovereign wealth funds, will invest 300 million euros in the process of recapitalisation of the cajas," Zapatero told a news conference in Qatar broadcast on the website of the Spanish government.

"They know we are carrying out reforms to boost the recovery and this is a step forward for this investment on the part of the Qatari funds is a sign of confidence," he added during a joint press conference in Doha with Qatar's Prime Minister Hamad bin Jassim bin Jaber bin Muhammad Al Thani.

Hamad is also the chief executive of the Qatar Investment Authority, the Gulf state's sovereign wealth fund.

Earlier Monday credit rating agency Moody's put a 50-billion-euro ($69-billion) price tag on the recapitalising of Spanish banks, more than twice the 20-billion-euro maximum that the government says would be required to rebuild banking balance sheets.

Zapatero was in Qatar in the first stop in a planned Middle East tour, in which he will also visit the United Arab Emirates and Tunisia.

He will travel to the United Arab Emirates on Tuesday and head to Tunisia on Wednesday in what will be the first visit by a Western leader to the country since the ouster of president Zine El Abidine Ben Ali.