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Spanish banks forced to raise extra capital

11 May 2012 Last updated at 14:11 BST

The Spanish government is to force its banks to take on an extra 30bn euros ($39bn; £24bn) of capital to cushion themselves against loans going bad.

The banks will have to raise the money or borrow from the government at an annual interest rate of about 10%.

A housing boom and bust has left many small lenders holding mortgage debt that may not be repaid.

Hugh Pym reports.