Newly-formed Bankia, Spain's biggest savings bank, said it would create a separate unit for holding risky assets such as repossessed land ahead of a stock market listing expected later this year.

The move echoes that of Barcelona-based La Caixa, which said in January it would hive off its real estate assets into an unlisted company before reversing its banking business into its already listed Criteria (CRIT.MC) unit. [ID:nLDE70R0AJ]

Formed from the merger of seven regional banks including heavyweight Caja Madrid, Bankia plans to go public with a net book value of 12 billion euros ($17 billion) and assets totalling 270 billion euros.

Spain's government has given savings banks -- or "cajas" -- a deadline to raise their solvency ratios to tough new minimum levels by either by getting private capital on board or accepting state funds.

Spain is under pressure to reassure markets on the solvency of its financial system, even more so after Moody's cut the credit ratings of seven banks in euro zone neighbour Portugal on Wednesday.

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