Spain to get bank bailout next week
By Benjamin Fox
Eurozone finance ministers agreed Monday (3 December) that €39.5 billion will be paid to prop up Spain's banks.
Speaking with reporters after the meeting, Jean Claude Juncker, who chairs the 17 member Eurogroup, stated that Spain had taken steps to fulfil its terms of the bailout.
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"The implementation of the program is well on track, meeting all required conditionality steps as enshrined in the memorandum of understanding," he said.
"We have also welcomed the decision by the ESM (European Stability Mechanism) board of directors to authorise the first tranche of the programme of up to 39.5 billion (euros). The disbursements will be made in mid next week," Juncker said.
The four nationalised Spanish banks will receive €36.97 billion in European aid. Of this, €17.96 billion - will go to Bankia, which holds 10 percent of Spanish savings deposits, while €5.43 billion will be disbursed to Novagalicia, €9.08 billion to CatalunyaCaixa and €4.5 billion to Banco de Valencia.
A further €2.5 billion will be paid into Spain's state-backed "bad bank," set up to bear losses, estimated at up to €60 billion, following the collapse of the country's property market.
The loans have a 12.5 year maturity meaning a repayment date of 2025, with Spain obtaining an interest rate averaging at less than 1 percent.
Spain's finance minister, Luis De Guindos, welcomed the deal. "We believe these are advantageous conditions, that will help heal, restructure and overcome the problems in the Spanish banking system. It's positive, it's fundamental, it's vital and we won't make the mistakes of the past," he said.
Portugal also received assurances that it would receive €2.5 billion in January as part of its bailout deal."Provided the authorities persevere with strict programme implementation, we reaffirmed our commitment to support Portugal until full market access is regained.
"Following the conclusion of this review, which we expect shortly, Portugal will receive 2.5 billion (euros) in January -- 2.5 billion that means 1.6 billion from EFSF/ESM and 0.9 billion from the IMF.
Juncker indicated that eurogroup talks on emergency funding for Cyprus would continue on 13 December.
Meanwhile, speaking after the meeting Juncker revealed that he would stand down as the eurogroup chairman at the end of the month. Juncker, who serves as both the Prime Minister and Finance minister of Luxembourg, has held the post since 2005.
Germany's Wolfgang Schaueble and France's Pierre Moscovici are already being touted as the front-runners for the job, although the Germans, through Klaus Regling, who was appointed as director of the ESM, have a senior EU finance post.
While Juncker has previously indicated support for Schaueble, he refused to be drawn on the matter. "I don't have to endorse anyone, I asked my colleagues to provide for my successor," he said.