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Spain formally requests EU aid for banks

06-26-2012 05:12 BJT

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Debt-ridden Spain, the eurozone’s fourth largest economy has now FORMALLY requested European aid of up to 100 billion euros for its struggling banking sector. It’s the fourth country to formally ask for aid following Ireland, Portugal and Greece.

At the request of the Spanish government, the eurozone countries offered up to 100 billion euros in rescue loans for Spanish banks on June the 9th. Spain made the formal petition for the aid on Monday, but the terms of the loans, including the size and interest rates, have yet to be agreed. They are expected to be discussed at an EU summit which starts Thursday in Brussels.

Two independent audits show the country needs around 62 billion euros, to recapitalize its banks.

Spain’s Economy Minister Luis de Guindos said in a letter to the Euro group the amount of 100 billion euros should be enough to cover all banks’ needs plus an additional security buffer.

Although Spanish banks will agree to pay back the loans with interest, it is the Spanish government that is on the hook if they can not, as in effect, the loans will be treated as government debt.

The idea of providing aid to Spain’s banks is facing strong opposition from Germany and some other northern European countries, as they are worried it could drive Spain’s sovereign debt to unprecedented levels.

European Commission Vice President Olli Rehn welcomed Spain’s decision, and pledged to speed up work in this regard.

Rehn expressed confidence that both sides might conclude an agreement on the Memorandum of Understanding in a matter of weeks.

 

Editor:Zhang Jingya |Source: CNTV.CN

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