MADRID, March 5 (Reuters) - Any restructuring of state-guaranteed debt accumulated by Spanish small and medium-sized companies during the COVID-19 crisis will not be compulsory for banks, according to government and financial sources, a softening of the original aid proposal. Socialist Prime Minister Pedro Sanchez announced 11 billion euros ($13.1 billion) of aid for SMEs on Feb. 24, without providing further detail. A government source told Reuters then the relief package would include debt write-offs for viable companies, with banks assuming part of the losses. But after two weeks of complex negotiations between the government, the central bank and financial institutions, the decision was that any such loss-sharing would be only voluntary for banks, implemented through a “code of good practice” that all banks will sign, according to a government source. The original proposal had created uncertainty for banks, which warned of a potential reclassification of a much wider share of their credit portfolios as bad loans than just part of the state-backed loans to be written off. Economy Minister Nadia Calvino has also been reluctant to impose write-offs -- anathema in Spain after the 2010 debt crisis -- various government sources told Reuters. “The banks are the ones who can discern which (companies) are viable and which are not and which instruments should be used,” Calvino said in a recent radio interview. The measure may be approved on March 9, according to another government source, and will be accompanied by other lines of support for SMEs such as direct aid, capital injections and a line to help companies cover their fixed costs, such as rent or utility bills. The government declined to comment until the official announcement. This aid will be particularly oriented towards the hard-hit hospitality sector. It will also help micro-enterprises that had not even applied for state-backed credit. Capital injection into medium-sized companies can be done through a tool known as participative credits that Spain has already been using to help large companies, such as Air Europa. A financial sector source with knowledge of the matter said automatic haircuts were “out of the equation”, but banks agreed they could renegotiate with companies on a voluntary basis. “Everybody agrees that there is a problem of indebtedness, everybody is going to have to bear part of the cost of this ... There is no bank that has any resistance to that,” the source said, adding that there were still questions about how to implement the code of good practices. Codes of good practice have had mixed success in the past as in the case of mortgage contracts, where lenders were always given some room to directly renegotiate terms with clients. Mortgage complaints from clients still account for the lion’s share of complaints filed with the Bank of Spain. Spanish companies have been among the most active in Europe in applying for state-backed credit and liquidity lines, but as in other European countries the focus has been switching to issues of solvency. The state-backed ICO credit agency, which bears up to 80% of potential loan losses on the loans for SMEs, has granted 91.5 billion euros in funding lines, mobilizing a total of 120.4 billion euros in financing. ($1 = 0.8380 euros) (Reporting by Jesús Aguado and Belén Carreño; editing by Andrei Khalip, Larry King)