Independent auditors said Spanish banks may need up to $78.6 billion in extra capital, to be filled mostly by a eurozone bailout, after Spain’s medium-term borrowing costs spiraled to a euro-era record Thursday.
Eurozone finance ministers met in Luxembourg to discuss how to channel up to $126 billion in aid to Spanish lenders weighed down by bad debts from a burst property bubble. Spain’s economy minister said in Madrid a formal request would be made in days for the bailout, which was agreed upon two weeks ago.
Many in the markets see the package as a mere prelude to a full program for the Spanish state.
Spain’s financial plight took center stage a week before a European Union summit tackles long-term plans for a closer fiscal and banking union in a bid to strengthen the euro’s foundations, after bailouts for Greece, Ireland and Portugal failed to end a 2½-year-old debt crisis.
“We are clearly seeing additional tension and acute stress applying to both banks and sovereigns in the euro area,” International Monetary Fund chief Christine Lagarde told reporters.
