‘Spain to formally ask for bank bailout’ - Gayo Lues

“We expect the Spanish authorities to put forward the formal request for financial assistance by next Monday,” Juncker said on Thursday at a meeting of eurozone finance ministers in Luxembourg.

Junker, who is also Luxembourg’s Prime Minister, added that officials from the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) would then travel to Madrid to negotiate the bailout conditions with the Spanish government.

Earlier this month, the European authorities agreed to lend Spain up to 100bn euros to help its banking sector hit by bad property loans, which means more debt would be added to the country’s already huge official borrowings.

However, on Thursday an independent audit of Spain’s banks has proposed a figure much smaller than what the Eurogroup expected, saying they would need up to 62bn euros in extra funding to deal with the country’s financial crisis.

The estimates of external aid needed to stabilize Spain’s banks were provided by two independent auditors, the US firm Oliver Wyman and German firm Roland Berger, covering 14 banking groups that account for 90 percent of the sector.

Oliver Wyman estimated that the Spain’s banks needed between 51bn euros and 62bn euros, while Roland Berger estimated 51.8bn euros.

Earlier in June, the Spanish government said it needs European Union financial assistance to save the banks, which are suffering after the collapse of the property market in 2008.

SAB/JR