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Saturday, June 9, 2012

Will Spain to Seek Bailout for Banks

Economy Minister Luis de Guindos said Saturday the aid will go to the banking sector only and so would not come with new austerity conditions attached for the economy in general.The money will be funneled through an existing bailout fund called the FROB.Spain will ask for a bank bailout from Europe, becoming the fourth and largest country to seek help since the single currency bloc's debt crisis erupted.
De Guindos said that with markets in turmoil, the government's efforts so far to shore up the financial sector -- through new provisioning requirements -- "Must be completed with the necessary resources to finance the needs of recapitalization."
"Therefore, the Spanish government states its intention to request European financing for the recapitalization of banks that need it," the minister told a press conference after a videoconference with colleagues from the 17-member eurozone.
A statement issued after that meeting said up to 100 billion euros would be made available to Spain.
The Spanish acceptance of aid for its banks is a big embarrassment for Prime Minister Mariano Rajoy, who said just 10 days ago firmly that the banking sector would not need a bailout.
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