Spain gets €30bn eurozone loan for struggling banks
EuroGroup agrees first part of €100bn payment will be handed over at end of month
FINANCE MINISTERS from the eurozone countries have agreed that the first instalment of a maximum €100bn loan to Spain's troubled banks will be €30bn, to be paid by the end of July. It is hoped the loan will obviate the need for a full bailout.
The new agreement by the 'EuroGroup' also includes an extra year for Spain to reach its deficit reduction targets. The country now has until 2014 to get its deficit down to the EU limit of three per cent, reports The Daily Telegraph.
The new plan has the support of Germany after Chancellor Angela Merkel agreed to drop her opposition. Individual ministers will still need to get approval from their national parliaments before the loan can be paid.
A statement from the group read: "The EuroGroup supports the recently adopted Commission recommendation to extend the deadline for the correction of the excessive deficit in Spain by one year to 2014."
EuroGroup president Jean-Claude Juncker said: "We are aiming at reaching a formal agreement in the second half of July, taking into account national parliamentary procedures, allowing for a first disbursement of €30bn by the end of the month to be mobilised as a contingency in case of urgent needs in the Spanish banking sector.
"There will be specific conditions for specific banks, and the supervision of the financial sector overall will be strengthened. We are convinced that this conditionality will succeed in addressing the remaining weakness in the Spanish banking sector."
The agreement has not been reached without argument. North European states such as Finland and the Netherlands are at odds with southern countries, including Italy and Spain, over the use of taxpayers' money to help banks. European Central Bank president Mario Draghi was subjected at times to hostile questioning.
Also yesterday the eurozone ministers had an initial discussion with Greece’s newly-elected finance minister Yannis Stournaras but no change was set for the country’s controversial austerity programme.