Spain Bank Recapitalisation "Not Urgent"

 

The direct recapitalization of Spanish banks by the euro area's permanent rescue fund isn't an urgent issue, a Spanish government official said.

The prospect of direct bank rescues became less relevant after stress tests revealed that Spain's lenders required less than half of the €100 billion approved by euro-area states, a Spanish official told reporters in Brussels today during a meeting of EU leaders.

Spain estimated on Sept. 28 it may need about 40 billion euros to recapitalize its banks. The government has played down the necessity of seeking additional aid while pushing for progress on a European banking union. Its borrowing costs have dropped since the ECB offered in August to buy bonds on the secondary market of countries that request aid from the euro-area rescue fund and agree to conditions.

Further aid for Spain isn't urgent as the country's last auction today shows it can finance itself, the official said on condition of anonymity in line with government policy. Spain will consider whether to seek assistance after the ECB has completed the design of its bond-buying mechanism, the official said.