EU Commissioner Warns:Soon It Could Be A Big Spanish Bank

Joaquín Almunia, vice president and head of competition at the European commission, has issued a warning over the state of the Spanish banking system.

Right now, it is just the cajas, or Spanish regional banks under threat, according to Almunia. But soon, it could be one of the country's biggest.

Almunia also implored Spain's cajas to take advantage of government support measures to prop up their capital levels now, before the Basel III rules on reserve requirements come into effect.

Almunia's comments come in the midst of a major banking shakeup in Spain, where many different cajas have merged together and one has been bailed out.

Thus far, only investor fear has spread to Santander and BBVA, Spain's two biggest banks. But what Almunia seems to be suggesting is that the reality of those banks' balance sheet conditions is not ideal, and may be endangered as the Spanish banking and European sovereign debt crises continue to develop