UPDATE 1-Spain agrees with opposition to speed bank reform

* Promises to support banking legislation

* Regional banks slow to reform

(adds detail)

MADRID, May 5 (BestGrowthStock) – Spain’s opposition leader Mariano
Rajoy said he has agreed with Prime Minister Jose Luis Rodriguez
Zapatero to speed up reform of the country’s banking sector
after a meeting on Wednesday.

“We have reached two agreements, … firstly, to facilitate
the (banks’) restructuring process and secondly … to propose a
reform of savings banks legislation,” Rajoy told a news
conference after meeting with Zapatero.

Many of Spain’s unlisted savings banks are undercapitalised
after overstretching during a property boom which burst two
years ago. Reform of the sector has been slow as promises to
merge have not materialized amid political wrangling.

Support by Spain’s opposition leader is key for the ruling
Socialists, which rule with a minority in parliament.

Up to now, the two leaders have been unable to renconcile
political differences over how to manage the economic crisis,
even as unemployment pushes up towards 20 percent.

Rajoy said the two had agreed on a plan for savings banks to
increase capital by issuing shares with voting rights.

The meeting has been the focus of much attention as Spain
was hit in recent days by fears of contagion from the Greek debt
crisis as investors worried about its large budget deficit and
its slow recovery from its worst recession in decades.
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(Reporting by Elisabeth O’Leary and Axel Bugge; editing by Judy
MacInnes)

UPDATE 1-Spain agrees with opposition to speed bank reform