Spain ready to kick off sale of nationalized banks

MADRID (Reuters) - Spain will appoint investment banks by next week to handle the sale of two bailed-out lenders, a source from the country's bank restructuring fund said on Monday.

The government could also provide support to protect potential buyers from a deterioration in the banks' loan books, the source from the fund, known as the FROB, said.

The two banks up for sale are Barcelona-based Catalunya Banc and NCG Banco of the northern region of Galicia.

NCG Banco has already attracted investor interest and will probably be the first of the two to be sold, the source said, with a disposal expected before the end of the year.

Spain has already spent over 75 billion euros ($98 billion) in the past four years to help 14 banks to recover from a 2008 domestic property crash and has the option to draw on more of a 100 billion euros available from Europe.

But the government does not expect to use the European credit line to help with the sale of the two banks, the FROB source said, and has also ruled out splitting up the banks for their sale.

Spain was forced to abort the sale of Catalunya Banc in March when those interested - some of Spain's healthier lenders - requested government-funded schemes or other types of aid to protect them against future losses.

Catalunya Banc and NCG Banco, together worth less than 10 percent of the Spanish market, were among the biggest recipients of the 41 billion euros Madrid took from Brussels in aid last year.

($1 = 0.7671 euros)

(Reporting by Jesus Aguado; Writing by Tracy Rucinski. Editing by Jane Merriman)