Spain to request EU Aid for banks
Baku, Sept 17 (AZERTAC). Spain said Saturday it would ask Europe for financial aid for its ailing banks, a step that would make it the fourth and largest euro-zone economy to require rescue funds from its euro-zone partners.
Spanish Finance Minister Luis de Guindos told a news conference that the European Union will grant Spain a loan of as much as €100 billion ($125 billion) that the government will funnel to banks that need capital. Euro-zone finance ministers said they welcomed the Spanish step, saying the sum "must cover estimated capital requirements with an additional safety margin."
Mr. de Guindos said, "The Spanish government is determined to do its best to protect the stability of the euro." He added that the conditions attached to the loans "will be imposed to banks, not to Spanish society, nor to its fiscal or economic policy." He added that "the figure seeks to dispel all doubts."
he agreement came after days of talks between Spanish and European officials that culminated in a conference call among finance ministers Saturday afternoon, in which the framework for the support was agreed.
European governments put intense pressure on Spain to agree to a support package for banks that have suffered in a real-estate crash—and ahead of Greek elections next weekend that they fear could send a new wave of turmoil through the region's financial markets.
The talks extended as Spain tried to minimize conditions on the loans and to limit the role of the International Monetary Fund, officials said. Spain also strenuously sought to avoid the aid being depicted as a bailout like those provided to Greece, Ireland and Portugal, officials said.
he euro-zone ministers said the IMF has been invited to assist in the implementation and monitoring of the financial support to Spain "with regular reporting." However, unlike Greece, Ireland and Portugal, Spain won't be asked to implement an extra austerity program beyond that it has already committed to. Unlike in these programs, the IMF won't provide funding for Spain.
The IMF's managing director, Christine Lagarde, said in a statement, "The IMF stands ready...to support the implementation and monitoring of this financial assistance through regular reporting." She also welcomed the decision to backstop Spanish banks with euro-zone funds.
In a report released late Friday, the IMF said it thought Spain's banks need an additional €37 billion in capital to cover losses in a deteriorating local economy. But it added they might need to raise much more than that—between €60 billion and €80 billion—to shore up investor confidence.
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