Spain: No austerity condition attached to bailout package
"The Spanish government will make an application for assistance from the European bailout fund for the recapitalisation of its banks," Spanish Economy Minister Luis de Guindos said ending weeks of uncertainty about whether Madrid will accept a bailout.
The government of Prime Minister Mariano Rajoy until now had ruled out the need for a bailout and insisted that it will manage the crisis in the banking sector with its own resources.
Spain will become the fourth euro-zone nation to receive a relief package from the EU and the International Monetary Fund after Greece, Ireland and Portugal since the outbreak of the euro-zone sovereign debt crisis two years ago.
Unlike the previous bailouts, Spain will not be subjected to austerity measures or structural reforms usually associated with a bailout and the conditions attached will be restricted to the banking sector only.
"The assistance and the conditions attached to it are not for the whole nation, but entirely for the banking sector," de Guindos said.
The bailout became necessary to prop up the Spanish banks, which were crippled by the huge debts accumulated as a result of the collapse of the property boom and the recession that followed.
In return for the assistance, Spain will have to make commitments that it will drastically reform the banking sector. It also will have to present concrete plans to restructure the ailing financial institutions.
In an emergency conference call on Saturday evening, finance ministers of the euro-zone nations offered Spain up to 100 billion euros to stabilise its banks
The rescue loan will be large enough to cover "all possible capital requirements," a statement by the euro-zone finance ministers said.