(Updates with comment from Zapatero in second paragraph. (For more on the European debt crisis, see EXT4.)
Oct. 27 (Bloomberg) -- Spanish Prime Minister Jose Luis Rodriguez Zapatero said five of the country’s banks will need to raise 17 billion euros following an accord between European leaders today and none will require state aid.
“All efforts to reinforce confidence in the financial system that generated the crisis are necessary,” Zapatero told reporters after European Union and euro area summits in Brussels that ended early today.
The accord is “balanced” as it addresses “doubts about previous stress tests regarding banks’ sovereign debt holdings”, he said. The agreement on recapitalization is “fundamental” to fight “a systemic crisis in the euro zone.”
Spanish banks’ needs are estimated at 26 billion euros, a figure that boils down to about 17 billion euros after their stock of bonds that are obligatorily convertible into shares is taken into account.
“The figure is significant for Spain because the banking sector is big considering the size of the country’s economy,” said Zapatero, pointing out that two out of the euro area’s five largest banks are Spanish.
The five banks that are concerned will “soon” present their recapitalization plans, Zapatero said.
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