The weekend bailout of a small Spanish savings bank could be the first of several rescues before a mid-year deadline for struggling lenders.

The Bank of Spains move is a salutary warning to other savings banks that they also risk being taken over if they drag their heels over mergers ahead of the FROB expiry date of June 30, said Santiago Carbo Valverde, Economic Analysis Professor at Granada University.

 

The rescue arrived at a bad time for the Spanish government, which last week announced a 15 billion euros ($18.55 billion) austerity package to repair public finances and jitters spread over Greece. Investors fear that bank balance sheets in some euro zone countries could deteriorate to such an extent that the government will struggle to bail them out.