Eurozone ministers agree 30bn euros for Spanish banks

 

Eurogroup President Jean-Claude Juncker said there would be specific conditions for specific banks

Eurozone finance ministers have agreed to lend Spain 30bn euros (£24bn; $37bn) this month to help its troubled banks.

It will be the first instalment of a bailout of up to 100bn euros, which was agreed in June.

The ministers will need to get approval from their own parliaments and hope to make the payment by the end of July.

The eurozone finance ministers also agreed to extend the 2013 deadline for Spain to cut its budget deficit to the EU limit of 3% by one year.

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.

The exact amount that Spain needs for the bailout of its banks may not be known until September.

The conclusions of the finance ministers from the 17 countries that use the euro will be submitted to a meeting of all 27 EU finance ministers later on Tuesday.

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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.

The ministers reappointed Mr Juncker as their chairman and picked German Klaus Regling to head the permanent bailout fund, the European Stability Mechanism (ESM), which is due to come into force this month.

It was meant to begin operations on Monday, but has not yet been ratified by the required number of member states.

The finance ministers meeting in Brussels also agreed that, once the single European banking supervisor has been set up next year, banks may be helped directly by the ESM without the need for state guarantees.

This was seen as a key part of attempts to stop the aid being given to weak banks from adding to countries' debts.

But there had been some objections to the measure from northern European countries.

Meanwhile, Germany's constitutional court will be sitting in Karlsruhe to hear objections to the ESM on Tuesday.

 

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  • rate this
    +3

    Comment number 312.

    where is this money coming from? and if it's from a fund previously paid into by us then let's have some of it back if Britain is in such a financial mess. About time we started looking after ourselves.

  • rate this
    +4

    Comment number 304.

    Another 30 billion for Spain. How is this a "bailout"? It is another LOAN for goodness sake. If a boat is waterlogged and about to sink. You do not pour in more water. If you do you are certainly not 'bailing it out'. you are rapidly sinking it.

  • rate this
    0

    Comment number 276.

    I think under the prevailing circumstances the EUROministers' decision is rational. What else could they have done?

  • rate this
    +3

    Comment number 208.

    You cannot control the markets, you can but temporarily influence them. Which is why paying money into these defunct Countries to stop their borrowing costs from spiralling out of control will not work. At least it is not our money, right?. But if you are a German taxpayer, you must be thinking: are we ever going to get any of this back?

  • rate this
    +2

    Comment number 125.

    I know there is no alternative. Allowing the banking sector to simply collapse would result in economic disaster. But what is utterly lacking is a punitive component. If banks need 100bn to survive, someone has done something in the past that has led to this situation. We need to see banker's and politician's heads rolling. Not only in eurozone, but also other bank bailout zones like the UK, US.

 

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