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Spanish banks to get eurozone rescue funds Spanish banks to get up to 100bn euros in rescue loans
(40 minutes later)
Spain is to get loans to help shore up its struggling banks, its economy minister has confirmed. Spain is to get up to 100bn euros ($125bn; £80bn) in loans from eurozone funds to try to help shore up its struggling banks.
He was speaking following an emergency meeting of eurozone finance ministers. The move was agreed during emergency talks with eurozone finance ministers.
Luis de Guindos said Spain had agreed to officially request assistance from eurozone rescue funds. Spain's Economy Minister Luis de Guindos said his country would shortly make a formal request for assistance.
He did not say how much the financial system would get, but he said it would be "significantly" more than the 40bn euros ($50bn; £32bn) recommended by the International Monetary Fund. He emphasised that the help would be for the financial system, not the economy as a whole. "This is not a rescue," he said.
Spain had been reluctant to ask for a full bailout, like the one given to Greece, Ireland and Portugal, as they come with demands for tax rises and spending cuts. "This is a loan which is given in very favourable conditions, which will be determined in the next few days. But they are very favourable - much more favourable than the market ones," Mr de Guindos told a news conference.
Mr de Guindos said one of the conditions of the the loans was the restructuring of the financial system, but not "micro-economic conditions". "The conditions are for the banks," he said. The Spanish government had been reluctant to ask for a bailout like the one given to Greece, Ireland and Portugal, as these rescue packages came with demands for spending cuts and stringent spending cuts.
"We hope that as a result of these injections [of capital] families and companies will have more solvent banks which are able to offer them credit, which they are not able to do at the moment," he told a news conference. Mr de Guindos said there would be conditions attached for the banks receiving the loans, but there would not be "micro-economic conditions" for Spain.
Spain was keen to ensure that any assistance went direct to its banks, rather than to the central government. As a result, the loans will go to its bank restructuring agency, called FROB. But this would still considered state debt, Mr de Guindos said. "We hope that as a result of these injections [of capital] families and companies will have more solvent banks which are able to offer them credit, which they are not able to do at the moment," he said.
No decision had been made on exactly who would disburse the funds, he said, but he suggested this would be one of the European rescue funds, the EFSF or the ESM. The Eurogroup of finance ministers welcomed the decision from Spain, Europe's fourth-biggest economy, to ask for help.
Spain was keen to ensure that any assistance went directly to its banks, rather than to the central government. As a result, the loans will go to its bank restructuring agency, called FROB. But this would still considered state debt, Mr de Guindos said.
The Eurogroup said it "considers that the Fund for Orderly Bank Restructuring, FROB, acting as agent of the Spanish government, could receive the funds and channel them to the financial institutions concerned. The Spanish government will retain the full responsibility of the financial assistance".
No decision had been made on exactly who would disburse the funds, Mr de Guindos said, but he suggested this would be one of the European rescue funds, the EFSF or the ESM.