MADRID — Spain has made a formal request for a loan to help clean up its troubled banking sector, Economy Minister Luis de Guindos said Monday.
However, the country has yet to specifiy how much of the $125 billion loan package offered by the 17 countries that use the euro it will ask for. De Guindos said the figure will be made known July 9 when Spain and its single- currency partners reach agreement on the terms of the loan, such as the interest rate.
Last week, two international audits commissioned by the government said Spain’s banks could need up to $77.7 billion to survive if the economy were to suffer an extreme deterioration.
Spain this month finally admitted that some of its banks were in severe trouble, owing to the buildup of toxic assets following the collapse of the country’s bloated real-estate sector after 2008.
The letter to the euro-area governments requesting the loan said the amount sought “would be sufficient to cover capital necessities as well as an additional margin of security up to a maximum of €100 billion.”
It was sent to Jean-Claude Juncker, the Luxembourg prime minister who is also president of the euro group of finance ministers.
Spain would like the loans to go directly to the banks, rather than have the government be responsible for repayment. While organizations such as the International Monetary Fund support this procedure, fellow eurozone country Germany has ruled it out. Berlin insists on abiding by current regulations under which the money must be given to a government, adding to its debt pile.
