Sunday, 10 June 2012

Spanish PM Hails EU Bank Aid, Says to Boost Confidence

Spain's prime minister Sunday hailed a 100 billion euro ($125 billion) credit line from the European Union for Spain's banks, saying it will help to shore up confidence in the ailing local economy and wider euro zone.
Mariano Rajoy also stressed that Madrid hadn't caved into pressure from the EU to fix its banks, but instead said he was the one calling for the aid.
The aid agreement came after days of talks between Spanish and European officials that culminated in a conference call among finance ministers Saturday afternoon, in which the framework for the support was agreed.
"The European project, the future of the euro and our banking system all won new credibility yesterday," Mr. Rajoy told reporters at a televised press conference in Madrid "This is a clear message that the euro project is irreversible."
"Europe has been up to the challenge," he said.
Mr. Rajoy said Spain wasn't under pressure to ask for EU help to fix its banks.
"I was the one putting pressure," he said. "I'd like to know why this deal wasn't reached earlier."
European governments were anxious for Spain to agree to a support package for banks that have suffered from a real-estate crash ahead of crucial Greek elections June 17, the outcome of which could send a new wave of turmoil through the region's financial markets.
The talks dragged on as Spain tried to minimize conditions on the loans, and limit the role of the International Monetary Fund, officials said, fearing it would send the wrong message to foreign investors on which the country depends to plug a government budget deficit that may reach over 5% of gross domestic product this year, down from 8.9% of GDP in 2011.
Madrid also sought strenuously to avoid the aid being depicted as a bailout like those provided to Greece, Ireland and Portugal.
Mr. Rajoy told reporters that the EU support plan for Spain was different to previous European rescues, and that loan conditions will be just linked to the country's banking sector overhaul.
A formal loan request by Spain is expected before June 21, when euro-zone finance ministers meet in Luxembourg and after a detailed report is issued by two government-appointed advisors on the banks' capital needs.
Rajoy is set later Sunday to travel to Poland, where he plans to meet that country's prime minister and watch Spain's opening match in the Euro soccer championship.