Open

Coming up

Don't miss

Replay


LATEST SHOWS

WEB NEWS

France's top consumer group sues Internet giants

Read more

WEB NEWS

Web users pay tribute to South Korea ferry victims

Read more

AFRICA NEWS

A landslide victory for the 'invisible candidate' in Algeria's Presidential polls

Read more

THE WORLD THIS WEEK

The World This Week - 18 April 2014

Read more

THE WORLD THIS WEEK

The World This Week - 18 April 2014 (part 2)

Read more

MEDIAWATCH

Presidential adviser resigns over "shoe-shine scandal"

Read more

#THE 51%

Breaking stereotypes

Read more

#TECH 24

Galaxy S5 v. HTC One (M8): Which is the right one for you?

Read more

FRANCE IN FOCUS

New PM Manuel Valls outlines priorities

Read more

  • Ukraine separatists call for Russian troops after deadly clash

    Read more

  • Why Syria’s cash-strapped jihadists let hostages go

    Read more

  • The Great War's unsung four-legged heroes

    Read more

  • UK’s Hamilton cruises to victory at Chinese Grand Prix

    Read more

  • Divers begin pulling bodies from sunken South Korean ferry

    Read more

  • Freed French journalists arrive home after Syria ordeal

    Read more

  • Syria’s Assad visits recaptured Christian town at Easter

    Read more

  • In pictures: French kite festival takes flight

    Read more

  • Le Pen’s National Front fail to woo Britain’s Eurosceptics

    Read more

  • PSG clinch fourth League Cup title after beating Lyon

    Read more

  • Militants kill Algerian soldiers in deadly ambush

    Read more

  • Scores killed in South Sudan cattle raid

    Read more

  • VIDEO: Anti-Semitic leaflets in Eastern Ukraine condemned

    Read more

  • In pictures: Good Friday celebrated across the globe

    Read more

  • Bouteflika, the ghost president

    Read more

  • Does Valls’ upcoming Vatican trip violate French secularism?

    Read more

  • Ukraine separatists say ‘not bound’ by Geneva deal

    Read more

  • Abel Ferrara’s hotly awaited DSK film to premiere on web

    Read more

  • Obama signs bill to block controversial Iran diplomat from UN post

    Read more

  • Astronomers discover Earth-like planet that could support life

    Read more

  • In pictures: Iranian woman pardons son’s killer at the gallows

    Read more

Europe

Spanish premier hails €100 billion eurozone lifeline

©

Video by Katharyn GILLAM

Text by News Wires

Latest update : 2012-06-10

Prime Minister Mariano Rajoy on Sunday welcomed a €100 billion lifeline the eurozone is offering Spanish banks, but noted the deal does not require austerity measures beyond Spain's commitments to cut its deficit and restructure the economy.

AP - Spain's leader hailed Sunday a eurozone lifeline of up to 100 billion euros ($125 billion) to save its stricken banks as a victory for his nation and for Europe.

Despite flatly denying any need for a rescue just 13 days earlier, Prime Minister Mariano Rajoy insisted Madrid had not caved in -- instead he had been pressuring for the aid.

After an emergency video conference on Saturday, the 17 eurozone finance ministers said in a statement they they were "willing to respond favourably" to a Spanish plea for help.

"I am very satisfied, I think we have taken a very decisive step," Rajoy, who had been criticised in the media for failing to appear earlier, told a news conference.

"Yesterday, the credibility of the euro won, its future, and the European Union," the prime minister argued.

"It was not easy," he conceded.

"Nobody pressured me and I don't know if I should say this, but it was I who pressured for a line of credit."

The rescue loan for Spain -- hailed by Germany, France, Japan and the United States as well as the IMF -- marked a dramatic, public U-turn for Spain, which had hotly denied any need for outside aid.

But Rajoy sought to paint it as a sign of European confidence in his government's reforms and austerity measures.

"If we had not done what we have done in the past five months, the proposal yesterday would have been a bailout of the kingdom of Spain," he declared.

The eurozone debt crisis has now snared the bloc's fourth-biggest economy -- Spain's is twice the combined size of those of Greece, Ireland and Portugal, the countries bailed out so far.

Spain finally sought aid as its borrowing costs on the open markets soared and the price for fixing the banks' balance sheets, heavily exposed to a property bubble that burst in 2008, spiralled.

Recently nationalised Bankia, which has the largest exposure to real estate, needs an extra 19 billion euros to repair its books in addition to 4.5 billion euros already injected by the state.

Economy Minister Luis de Guindos told a news conference on Saturday that the loan of up to 100 billion euros did not amount to a rescue but Rajoy declined to be dragged into a semantic debate Sunday.

De Guindos said the loan would be provided on preferential terms and a source close to the talks told El Pais it would cost three percent a year, about half the latest open market rate Spain has had to pay.

The government highlighted the fact that the deal imposed no new austerity measures or restrictions on the broader economy.

Nevertheless, eurozone ministers said they were confident Spain would honour commitments to cut the deficit and restructure the economy. "Progress in these areas will be closely and regularly reviewed," they said in the statement.

Most of the Spanish newspapers' front pages headlined with the word "Rescue," although some sought so soften the blow. "Rescue without humiliation," insisted the conservative daily El Mundo.

"So we have a new concept. A 'lite' bailout with no material conditions on the sovereign and instead merely the banks that apply," Lloyds Banking Group economist Charles Diebel said in a report.

"This is the latest in the long list of euro measures to stem the crisis.

"Will it be enough? That's questionable as it is still prevention rather than cure and again only keeps the banking sector alive rather than really supporting growth."

The scale of the aid depends on an external audit being carried out for Madrid by consultants Roland Berger and Oliver Wyman. The audit is due by June 21 but de Guindos said it would ready within a few days.

International Monetary Fund bank stress tests, unveiled Friday three days ahead of schedule, determined that Spanish banks need about 40 billion euros in new capital, with a backstop on top of that.

Spain's economy minister stressed that the aid would include a big safety margin while the assistance is to be channelled through Spain's state-backed bank restructuring fund.

The eurozone hopes the rescue will satisfy financial markets and put Spain in a safe harbour ahead of the Greek elections on June 17, when there is a risk voters could reject their bailout terms, forcing Athens into a destabilising exit from the eurozone.
 

Date created : 2012-06-10

  • SPAIN - BANKING

    Bankia shares drop after record bailout plea

    Read more

  • SPAIN

    Spain's Bankia requests multibillion-euro bailout

    Read more

Comments

COMMENT(S)