Spain may submit a formal request for bank aid from its euro-area partners within the “next hours,” Luxembourg’s Finance Minister Luc Frieden said in an interview this morning.
“If I understood correctly, Spain wants to make such a request within the next hours,” Frieden, said at about 10:30 a.m. today before a meeting of European Union finance ministers in Luxembourg.
Spain’s banks would need as much as 62 billion euros ($78 billion) in capital to withstand a worst-case economic scenario, according to two consulting firms hired by the government to conduct stress tests on the lenders. The Spanish government will use the results to determine how much money it might need to draw from the 100 billion euros made available by Europe after it requested funding to clean up banks.
In a meeting of euro finance chiefs yesterday, Spanish Economy Minister Luis de Guindos indicated that the initial request will be “vague” and may not say “exactly how much money” Spanish banks need, Frieden said.
“I know that it is difficult for Spain to know which banks need to be recapitalized and by how much, but we are in a crisis of confidence and you can only build confidence if you act fast and decisively,” he said.
Spain hopes to complete a memorandum of understanding in “two or three weeks” that will include more details of the financial aid program to banks, according to de Guindos.
Spain has a “roadmap” to solve its banking crisis, de Guindos said. “We have advanced on the terms and the conditions regarding the financial assistance for Spain. We therefore have a plan of action which I believe is fundamental.”
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