Mr de Guindos is in the city to sell foreign investors on the so-called "bad bank", where Spain will park the poor property assets that are weighing down its lenders.

BBC: Spain does not need a bailout - Luis de Guindos

The nationalisation comes after the European Commission blocked an earlier plan that would have seen the country's other large banks, Rabobank, ING and ABN Amro, contribute capital to a so-called "bad bank" to house SNS Reaal's distressed property assets.

CNN: Netherlands nationalizes SNS Reaal

The plan would stabilize local property values and simultaneously remove bad loans from bank balance sheets.

FORBES: A Monster Real Estate Paradigm Shift Demands A New Direction for Capital

While SNS Reaal has been trying to direct its own trajectory, an attempt to unload its property loans into a so-called bad bank, with other Dutch banks as shareholders, was shot down by the European Commission earlier this month because of competition concerns.

WSJ: SNS Reaal Is in Talks to Avoid Bailout

Cautious valuations will help set a floor for property markets and make it easier for the bad bank to sell assets quickly.

ECONOMIST: ��Bad banks�� seldom turn a profit but are still useful

Spanish bank Santander has said its quarterly profits fell by more than 90% after taking provisions for bad property loans in its local market.

BBC: Santander profits sink 90% on bad property loans

Banks, awash in bad debt, are to be encouraged to start lending again to property and construction projects, and the central bank will be less strict in classifying bad loans.

ECONOMIST: Dead Ostrich Bounce