Spain has formally requested European financial assistance of up to €100bn for its banks, according to a statement issued by the country’s economy ministry.
In a letter issued to Luxembourg’s prime minister and chairman of the group of eurozone finance ministers Jean-Claude Juncker, Spain’s economy minister Luis de Guindos said that the final amount required would be established before the next scheduled eurogroup meeting on 9 July, but should be sufficient to cover all of the banks’ needs and also to provide an additional security buffer.
De Guindos said that Spain’s authorities would offer “all their help” in deciding the loan’s eligibility criteria, conditions, required measures and contract definition in time for the 9 July meeting. He added that the state-backed Fund for Orderly Bank Restructuring (FROB) would act as the vehicle channelling funds to banks in need.
Spain’s economy minister acknowledged that bolstering the capital of Spain’s banks would not be “an instantaneous process”. A study of the industry conducted by four auditors is scheduled for publication at the end of July, followed by a more in-depth analysis in September.
The country is expected to survive the review, which it must do to retain its place in the European Central Bank’s asset purchase programme.
The bank believes that the battered UK currency, recently only just holding above the US$1.20 level, could be trading at US$1.36 by this time next year.
The Middle East oil producer’s debut global bond issue surpassed the total of US$16.5bn raised by Argentina when it tapped the market earlier this year.
The group reports that currency fluctuations were less of a challenge to multinationals in the second quarter of 2016, but Brexit has since spelt a return to volatility.