Spain bank fund to be available for all-radio

MADRID, June 24 (Reuters) - Spain's 90 billion-euro ($126.6 billion) banking sector fund will be made available to both struggling banks and healthy institutions that wish to restructure, Spanish radio reported late on Wednesday.

The government is expected to propose the fund on Friday during its weekly cabinet meeting.

Banks without capital shortages may have access to the fund if they need extra liquidity to improve efficiency through branch closures or other measures, Cadena Ser said citing a copy of the proposal.

If any bank uses public money it should be open to possible mergers, the radio said.

Government approval to use the fund would only be necessary if more than 27 billion euros were needed, it added.

Spain's banks have largely avoided contamination from global toxic debt due to strict oversight by the Bank of Spain, but are suffering from deteriorating credit quality amid the worst economic recession Spain has seen in 50 years. (Reporting by Paul Day; Editing by Steve Orlofsky)