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Spanish Economy Minister Luis de Guindos has said that Spain has no immediate plans to request a bailout to recapitalize its banks.
LONDON, UK – Spanish Economy Minister Luis de Guindos has said that Spain has no immediate plans to request a bailout for its struggling banks.
Guindos’ comments – which were made on the sidelines of meetings in Brussels on Wednesday – follow reports circulating in recent days that Spain was seeking euro zone funds to recapitalize its banking sector.
According to the BBC, Guindos told reporters that he had “absolutely not discussed any intervention in Spain’s banks today,” that Spain was not preparing a request for a rescue package from the EU’s bailout fund, and that a decision would not be made on the matter until International Monetary Fund (IMF) and independent audits of Spain’s banks had been completed, possibly by the end of this month.
However, Guindos said that work on a wider “road map” for the Spanish financial sector was underway within the European Union, which would encompass possible bank recapitalization, and added that the transfer of any rescue funds to lender Bankia – which has already received a bail-out – would form part of this broader package, Fox News Business reports.
Guindos also said that Europe had “no other option” but to take steps towards greater fiscal integration through the establishment of a banking union, which the minister said was “fundamental” and would include a system through which lenders could be recapitalized.
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The possibility of a bailout for Spain’s banks with euro zone money would enable the country to avoid the austerity measures that would be imposed were an EU/IMF international bailout to be provided, and the proposal has been supported by the European Commission.
But while Madrid has warned that it is too expensive for Spain to borrow money to shore up its banks due to current interest rates of between 6 and 7 percent, Germany has rejected the idea because it says German taxpayers would essentially be putting up the funds to rescue Spanish banks, Sky News reports.
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