Spain explores banks bailout by eurozone partners

Up to 60 billion euros (£48 billion) will be needed to bail out Spain’s banks, according to the country’s second biggest lender, BBVA.Spain explores banks bailout by eurozone partnersThe results of independent stress tests of the Spanish banking sector will be published next week on 28 September.

But previews are already being sent to the country’s financial institutions.

Spain’s conservative Prime Minister Mariano Rajoy has in the past insisted Madrid would not become the fourth European capital in recent years to apply for such a bailout, but it now looks as though a programme is now likely.

Spain’s banking sector needs recapitalising, and much of the money would come from the 100bn euros in European Union funds already pledged by eurozone finance ministers in June.

“We’ll get a figure of around 70, 75 or 80 billion euros,” BBVA’s Chairman Francisco Gonzalez said.

That figure includes around 20 billion euros already allocated to troubled banks, which means 50-60 billion euros is still required.

Many in Brussels and beyond now assume it is only a matter of time before Spain becomes the fourth eurozone country to take a bailout.

That is important because of the different manner in which this bailout is being put together.

A European Commission spokesman said it would be wrong to see this as a “kind of proto-bailout” – but to many it does look like a bailout-by-stealth.

Over the last few months Spanish officials have held numerous meetings with their European counterparts, working out what Madrid would have to do to fullfil the criteria of any bailout deal.

Officials say Spain is already living up to any future bailout terms.

Next Thursday Mr Rajoy will unveil the next Spanish budget. Rather than more cuts, more austerity, he is pushing for structural reforms to help him make savings.

Such reforms will form the basis of a bailout agreement with the so-called troika – the European Commission, European Central Bank and International Monetary Fund.

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