French President Francois Hollande said Spanish banks should be recapitalized with Europe’s aid, contradicting European Union Economic and Monetary Commissioner Olli Rehn who said the country can do that on its own.
“It would probably be desirable to have a recapitalization,” Hollande said at a press conference in Washington today when asked about Spanish banks. “It would probably be necessary for this recapitalization to take place through mechanisms of European solidarity.”
Banco Santander SA (SAN) and Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain’s biggest lenders, were cut three levels by Moody’s Investors Service yesterday, which cited a recession and mounting loan losses in downgrading 16 of the nation’s banks. Concern about the possible expense to the government of bailing out banks’ real-estate losses has helped to drive up the country’s borrowing costs.
“Spain is not comparable to, for instance, Ireland, which had a banking sector many times larger compared to gross domestic product” EU’s Rehn said in a Bloomberg Television interview in London today. “Spain has the starting point that it can deal with this challenge on its own without resorting to European assistance.”
Spanish Deputy Prime Minister Soraya Saenz de Santamaria didn’t comment today when asked at a news conference whether the government was considering seeking assistance from the European Union to shore up lenders.
Hollande, who met with President Barack Obama earlier today, also said France and Germany will do “everything” to keep Greece in the euro zone. European leaders participating in meetings of the Group of Eight nations at the Camp David retreat in Maryland later today are probably going to have separate discussions on this topic, he said.
Separately, Hollande said France is ready to use all tools to keep oil prices stable, including backing use of strategic reserves.
To contact the reporter on this story: Sandrine Rastello in Washington at email@example.com; Helene Fouquet in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Chris Wellisz at email@example.com