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Thursday, July 19, 2012

Euro zone's Spain Aid for Bank Recapitalization, Not Other Use ...

Spain (Photo credit: NASA Goddard Photo and Video)
The sum of up to 100 billion euros ($122 billion) that the euro zone has agreed to lend to Spain is only for recapitalising the country's banks and not for any other possible use such as bond market intervention, the European Commission said on Thursday.
"The up to 100 billion euros, which the euro zone has undertaken to provide to Spanish banks is to do just that, it is only for that purpose and not for any other," Commission spokesman Simon O'Connor told a regular briefing.
"There is no link between assistance for bank recapitalization in Spain and any other type of financial assistance, which might be requested at some further juncture by Spain or anybody else," he said.
Spanish daily El Pais wrote on Thursday that any amount not used for bank recapitalization out of the up to 100 billion euros could be used to buy public debt.
"The press reports have been based on a misinterpretation of the legal document," O'Connor said. The document spelling out the agreement reached with the euro zone for a bank bailout of up to 100 billion euros says that unused money from the bank recapitalization could be used for different purposes. Madrid has yet to specify how much of the total it intends to take.
But for that to happen, Spain would formally have to ask the Eurogroup of euro zone finance ministers for their agreement.... Continue to read.
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