Eurogroup approves 100-billion-euro Spanish bank package
Baku, July 21 (AZERTAC). Eurozone finance ministers approved an agreement on Friday to lend up to 100 billion euros (US$123 billion) to Spain so it can recapitalize its banks, but the exact size of the loan will probably only be determined in September.
In a conference call, ministers signed off on a lengthy memorandum of understanding with Spain spelling out the terms of the aid, which will be fully disbursed by the end of 2013.
But before Spain can decide exactly how much money it needs, it must see the results of in-depth audits of its banking sector, which is riddled with bad property loans.
Speaking at a news conference after the conference call, Luxembourg's Finance Minister Luc Frieden said the ministers had given the go-ahead.
“We have formalized what we discussed in the past two Eurogroup meetings. We have formally approved the memorandum that lays out the conditions under which Spain can be lent money for the recapitalization of its banks,” Frieden told reporters.
“The approval of all 17 ministers is there, and that means that the program can continue. Money will not flow immediately, because work on the analysis of the specific banks is ongoing.”
There are signs of growing discontent at the economic pain being heaped on the Spanish public. Hundreds of thousands of Spaniards marched against the center-right government's latest measures on Thursday evening, following more than a week of demonstrations across the country.
Parliament approved on Thursday a package of 65 billion euros (US$80 billion) of spending cuts and tax hikes which are likely to deepen the recession already gripping Spain.
Under the bailout memorandum, 14 banking groups that make up about 90 percent of Spain's banking system will be tested for their recapitalization needs in a review due to be completed by the second half of September.
An independent audit from consultancy firms Oliver Wyman and Roland Berger, published on June 21, showed the banking sector needed up to 62 billion euros in total.
But a second, more detailed audit, as well as new stress tests, will help determine precisely how much each bank needs and in what form — loans or cash.
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