Spain bows to inevitable, will seek bailout
Spain will be fourth euro nation to ask for help. Bailout will be for Spain's troubled banking sector, so no added austerity measures are expected.
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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.
He gave no figure as to how much Spain will request, saying that he would wait until independent audits of the country's banking sector have been carried out before asking for a specific amount.
De Guindos did say, however, that Spain would request enough money for recapitalization, plus a safety margin that will be "significant."
The money will be funneled through an existing bailout fund called the FROB.
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 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.