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Eurozone ministers agree 30bn euros for Spanish banks | Eurozone ministers agree 30bn euros for Spanish banks |
(about 1 hour later) | |
Eurozone finance ministers have agreed to offer Spain 30bn euros (£24bn; $37bn) to help its troubled banks. | Eurozone finance ministers have agreed to offer Spain 30bn euros (£24bn; $37bn) to help its troubled banks. |
After nine hours of emergency talks in Brussels, the ministers said the money would be available by the end of July. | After nine hours of emergency talks in Brussels, the ministers said the money would be available by the end of July. |
It was also agreed that a 2013 deadline for Spain to cut its budget deficit to the EU limit of 3% could be extended by one year. | It was also agreed that a 2013 deadline for Spain to cut its budget deficit to the EU limit of 3% could be extended by one year. |
There have been fears that Spain's troubled banks could lead the country to ask for a full state bailout. | There have been fears that Spain's troubled banks could lead the country to ask for a full state bailout. |
Eurozone countries agreed in June to lend up to 100bn euros ($125bn; £80bn) to support Spain's banks. | |
The yield on Spanish bonds rose sharply on Monday ahead of the meeting, with many fearing that little concrete action on Spanish banks would be reached. | The yield on Spanish bonds rose sharply on Monday ahead of the meeting, with many fearing that little concrete action on Spanish banks would be reached. |
"We are aiming at reaching a formal agreement in the second half of July, taking into account national parliamentary procedures, allowing for a first disbursement of 30bn euros by the end of the month to be mobilised as a contingency in case of urgent needs in the Spanish banking sector," Eurogroup President Jean-Claude Juncker said. | |
"There will be specific conditions for specific banks, and the supervision of the financial sector overall will be strengthened," he added. | |
"We are convinced that this conditionality will succeed in addressing the remaining weakness in the Spanish banking sector." | |
Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule. Glossary in full | |
Mr Juncker also said that Madrid should implement measures needed to bring its public finances into line with EU norms. | |
On Saturday, Spanish Prime Minister Mariano Rajoy announced that he would take further steps soon to cut the country's public deficit. | |
In a news conference at the end of Monday's marathon meeting a number of appointments were also announced. | |
Yields rise | |
The ministers reappointed Mr Juncker as their chairman and picked German Klaus Regling to head the permanent bailout fund, the European Stability Mechanism, due to come into force this month. | The ministers reappointed Mr Juncker as their chairman and picked German Klaus Regling to head the permanent bailout fund, the European Stability Mechanism, due to come into force this month. |
The finance ministers' conclusions will be submitted to a meeting of all 27 EU finance ministers later on Tuesday. | |
Earlier on Monday, the yield on Spanish 10-year bonds - which are taken as a strong indicator of the interest rate the government would have to pay to borrow money - rose above 7%, while Italian bond yields rose to 6.1%. | |
Yields above 7% are considered to be unsustainable in the long term. | |
Among the key agreements from the 29 June summit were moves towards a banking union with the European Central Bank (ECB) acting as a supervisor and allowing European bailout funds to buy bonds to try to reduce countries' borrowing costs. | |
But since the summit, there have been signs that Finland and the Netherlands would oppose the use of bailout funds in this way. |