Spain set to seek EU aid for banks
Source: Agencies |
June 9, 2012, Saturday
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Print Edition
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SPAIN is expected to ask the eurozone for help with recapitalizing its banks at the weekend, sources in Brussels and Berlin said yesterday, becoming the fourth country to seek assistance since Europe's debt crisis began.
Five senior European Union and German officials said deputy finance ministers from the single currency area would hold a conference call today to discuss a Spanish request for aid, although no figure for the assistance has yet been fixed.
Later the Eurogroup, which consists of the eurozone's 17 finance ministers, will hold a separate call to discuss approving the request, the sources said. "The announcement is expected for Saturday afternoon," one of the EU officials said.
The dramatic move comes after Fitch Ratings cut Madrid's sovereign credit rating by three notches to BBB on Thursday, highlighting the Spanish banking sector's exposure to bad property loans and to contagion from Greece's debt crisis.
"The government of Spain has realized the seriousness of their problem," a senior German official said.
He added that an agreement needed to be reached before a Greek election on June 17 which could cause market panic and increase the possibility of Athens leaving the eurozone if left-wing parties opposed to Greece's EU/International Monetary Fund bailout win.
The European Commission's spokesman on economic affairs said Spain had made no request for aid and he would not confirm that a conference call was planned. But he added that if Spain did make a request, the eurozone was ready to help.
"If such a request were to be made, the instruments are there, ready to be used, in agreement with the guidelines agreed in the past," Amadeu Altafaj said.
Speaking in Berlin, German Chancellor Angela Merkel said she was not pressing any country to take a bailout, saying it was up to Spain to decide what it wanted to do. Spain is expected to request aid from the eurozone's 440-billion-euro (US$548 billion) bailout mechanism, known as the European Financial Stability Facility.
Five senior European Union and German officials said deputy finance ministers from the single currency area would hold a conference call today to discuss a Spanish request for aid, although no figure for the assistance has yet been fixed.
Later the Eurogroup, which consists of the eurozone's 17 finance ministers, will hold a separate call to discuss approving the request, the sources said. "The announcement is expected for Saturday afternoon," one of the EU officials said.
The dramatic move comes after Fitch Ratings cut Madrid's sovereign credit rating by three notches to BBB on Thursday, highlighting the Spanish banking sector's exposure to bad property loans and to contagion from Greece's debt crisis.
"The government of Spain has realized the seriousness of their problem," a senior German official said.
He added that an agreement needed to be reached before a Greek election on June 17 which could cause market panic and increase the possibility of Athens leaving the eurozone if left-wing parties opposed to Greece's EU/International Monetary Fund bailout win.
The European Commission's spokesman on economic affairs said Spain had made no request for aid and he would not confirm that a conference call was planned. But he added that if Spain did make a request, the eurozone was ready to help.
"If such a request were to be made, the instruments are there, ready to be used, in agreement with the guidelines agreed in the past," Amadeu Altafaj said.
Speaking in Berlin, German Chancellor Angela Merkel said she was not pressing any country to take a bailout, saying it was up to Spain to decide what it wanted to do. Spain is expected to request aid from the eurozone's 440-billion-euro (US$548 billion) bailout mechanism, known as the European Financial Stability Facility.
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