Spanish government is asking domestic banks to put aside extra cash to buffer the potential real estate price swings. This time the top five lenders will set aside €15B and this is the second time that the Spanish government demanded so in 3 months. In February, banks were asked to increase their capital buffer requirements by €54B by the end of the year.This further signals the weakness of European financial institutions after one of the largest Spanish banks, Bankia, was effectively taken over by the state at the end of last week. Bankia was formed in 2010 from a merger of 7 small savings banks and was listed on the exchange in summer 2011. It raised €3.3B for the IPO, but since then, real estate prices in Spain continued to fall and there is little indication that prices have bottomed. With a large amount of real estate assets in its portfolio, Bankia’s share prices lost 40% compare to IPO up until last week. With the announcement of state takeover, it dropped another 10+% and hit its all time low today at €1.86.