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Spain: No request for bailout, says minister Spain: No request for bailout, says minister
(40 minutes later)
Spain's economy minister has dampened speculation that the country is about the seek a bailout of its bank sector. Spain's economy minister has dampened speculation that the country is about to seek a bailout of its bank sector.
Luis de Guindos said no decision would be made until audits of the banks were completed, possibly by the end of June.Luis de Guindos said no decision would be made until audits of the banks were completed, possibly by the end of June.
There have been reports in the last few days that Spain was seeking an immediate bailout from eurozone funds.There have been reports in the last few days that Spain was seeking an immediate bailout from eurozone funds.
Mr de Guindos was speaking in Brussels, where proposals aiming to avoid future taxpayer-funded bailouts of banks have been published.
An IMF audit of Spain's banks is due next week, with further independent reports completed about two weeks after, Mr de Guindos said.An IMF audit of Spain's banks is due next week, with further independent reports completed about two weeks after, Mr de Guindos said.
"I have absolutely not discussed any intervention in Spain's banks today," Mr de Guindos told reporters on the sidelines of meetings in Brussels."I have absolutely not discussed any intervention in Spain's banks today," Mr de Guindos told reporters on the sidelines of meetings in Brussels.
Asked if Spain was preparing a request for EU aid, he said: "We are not preparing anything... we have a road map."Asked if Spain was preparing a request for EU aid, he said: "We are not preparing anything... we have a road map."
The comments helped lift shares in Spain's leading companies by about 3% in morning trading on the Madrid stock exchange.The comments helped lift shares in Spain's leading companies by about 3% in morning trading on the Madrid stock exchange.
However, speculation remains that Spain's bank sector is too weak to escape an eventual bailout.However, speculation remains that Spain's bank sector is too weak to escape an eventual bailout.
Spain is trying to find more than 80bn euros ($100bn; £65bn) to strengthen its banks' capital buffers.Spain is trying to find more than 80bn euros ($100bn; £65bn) to strengthen its banks' capital buffers.
But on Tuesday, Spain's finance minister said the credit markets were "effectively shut" to his country, inflaming worries that the country would be forced to join Greece, Portugal and Ireland in using the European Financial Stability Facility.But on Tuesday, Spain's finance minister said the credit markets were "effectively shut" to his country, inflaming worries that the country would be forced to join Greece, Portugal and Ireland in using the European Financial Stability Facility.
Cristobal Montoro told Spain's Onda Cero radio "the door to markets is not open for Spain".Cristobal Montoro told Spain's Onda Cero radio "the door to markets is not open for Spain".
A key test will come on Thursday, with Spain due to auction up to 2bn euros of bonds.A key test will come on Thursday, with Spain due to auction up to 2bn euros of bonds.
'Serious situation''Serious situation'
On Wednesday, the European Commission unveiled proposals designed to stop taxpayers' money being used to bail out failed banks.On Wednesday, the European Commission unveiled proposals designed to stop taxpayers' money being used to bail out failed banks.
The aim is to ensure losses are borne by bank shareholders and creditors and minimise costs for taxpayers.The aim is to ensure losses are borne by bank shareholders and creditors and minimise costs for taxpayers.
However, new legislation is unlikely to came into force before 2014 at the earliest, too late to protect taxpayers from any further immediate bank failures.However, new legislation is unlikely to came into force before 2014 at the earliest, too late to protect taxpayers from any further immediate bank failures.
"The proposal we have today may be only useful for the future but it does not solve the current problems we face," said Sharon Bowles, chair of the European Parliament's economic and finance committee.""The proposal we have today may be only useful for the future but it does not solve the current problems we face," said Sharon Bowles, chair of the European Parliament's economic and finance committee."
"In the short term we need further measures," she said."In the short term we need further measures," she said.
Stefaan de Rynck, a spokesman for Michel Barnier, the EU's top regulatory official who outlined the banking plans, said: "We are faced with a serious situation today, but that does not stop us thinking about the future, and from us developing a vision about the future.Stefaan de Rynck, a spokesman for Michel Barnier, the EU's top regulatory official who outlined the banking plans, said: "We are faced with a serious situation today, but that does not stop us thinking about the future, and from us developing a vision about the future.
"Our proposal today puts a key element on the table.""Our proposal today puts a key element on the table."
The changes announced by Mr Barnier form part of commitments agreed by the leaders of the G20 group of major economies in September 2009. There would be new requirements for countries to prepare for a bank collapse, collecting money through an annual levy on banks that would be used to provide emergency loans or guarantees.
They would give EU authorities the power to intervene early. The new arrangements would allow authorities to reduce the claims of unsecured creditors, meaning that shareholders and creditors bear the losses, not governments and the taxpayers that support them.
A new mechanism will allow authorities to reduce the claims of unsecured creditors, meaning that shareholders and creditors bear the losses, not governments and the taxpayers that support them. href="http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/570&format=HTML&aged=0&language=EN&guiLanguage=en" >The European Commission plans involve drawing up a EU-wide framework that would allow:
  • Financial regulators to be more "intrusive" in the running of banks as firms' stability worsens
  • Forcing banks to draw up explicit "recovery" and "resolution" plans in the event of their finances deteriorating
  • Countries to enforce the sale of all or a part of failed banks, overriding the rights of shareholders or creditors
  • Appointment of a "special manager" at a bank to "restore its financial situation"
  • Lays the foundations for an "increasingly integrated EU-level oversight of cross-border entities"
The changes form part of commitments agreed by the leaders of the G20 group of major economies in September 2009.
Mr Barnier said: "The financial crisis has cost taxpayers a lot of money. Today's proposal is the final measure in fulfilling our G20 commitments for better financial regulation.
"We must equip public authorities so that they can deal adequately with future bank crises. Otherwise citizens will once again be left to pay the bill, while the rescued banks continue as before knowing that they will be bailed out again."
If it wins the backing of EU countries and the European parliament, the law would mark a step in the direction of the banking union supported by European Central Bank president Mario Draghi.If it wins the backing of EU countries and the European parliament, the law would mark a step in the direction of the banking union supported by European Central Bank president Mario Draghi.
Are you in Spain or any other European country affected? What measures do you hope to see taken to ease pressure on your country's economy? How have you been affected by the economic situation? Send us your comments using the form below.Are you in Spain or any other European country affected? What measures do you hope to see taken to ease pressure on your country's economy? How have you been affected by the economic situation? Send us your comments using the form below.