Spain’s government on Friday approved a €9bn ($12.7bn, £7.7bn) fund to bail out banks and help reshape the country’s financial sector.

The Fund for Ordered Bank Restructuring is intended to prevent solvency problems and encourage mergers. The Bank of Spain will manage the fund, allowing it to take control of banks that face difficulties following the collapse of the Spanish housing market. Institutions that borrow from the fund will have five years to pay off their loans.