Spain called for outside support for the first time to battle the financial crisis as Budget Minister Cristobal Montoro said European institutions should help shore up the nation’s lenders.
Spanish banks don’t need “excessive” amounts to recapitalize, and the question is “where that figure comes from,” Montoro said in an interview with Spanish broadcaster Onda Cero today, as he ruled out a full rescue for the euro region’s fourth-biggest economy.
Merkel said late yesterday systemic banks may need supervision at the European level as the European Union weighs possible steps toward “political union.” She met European Commission head Jose Barroso to prepare for an EU summit on June 28-29, after the 27-nation EU’s executive arm backed Rajoy’s calls for the ESM to be empowered to recapitalize banks directly.
Spain’s economy, which is twice as big as Greece, Portugal and Ireland combined, moved to center stage in Europe’s debt crisis after last month’s nationalization of Bankia group, and the spread over German yields has swelled about 90 basis points since then. The Madrid-based lender’s request for 19 billion euros to mend its balance sheet underlined banks’ mounting losses and the strains on the state’s ability to absorb them.