European Union competition regulators approved on Wednesday restructuring plans for nationalized Spanish lenders Bankia , NCG Banco , Catalunya Banc and Banco de Valencia .

"The approval of the restructuring plans of BFA/Bankia, NCG, Catalunya Banc and Banco de Valencia is a milestone in the implementation of the Memorandum of Understanding between euro area countries and Spain," EU Competition Commissioner Joaquin Almunia said in a statement, referring to Spain's euro zone bank bailout.

The European Commission said Banco de Valencia would be sold and integrated into Caixabank , and the other three banks would need to cut their balance sheets by more than 60 percent over the next five years.

There will be a pay cap and a coupon payment and acquisition bans on the banks during their restructuring period. Investors will have to share the revamp costs, reducing the needed state aid by about 10 billion euros.

(Reporting by Foo Yun Chee; editing by Robin Emmott)