MADRID (AP) — Spain could ask for a rescue of its struggling banks during an emergency conference of European finance ministers Saturday, with one official saying the bailout package could be as large as €80 billion ($100 billion).
Pressure is mounting on Madrid to ask for help in propping up its banks struggling with by toxic real estate loans. If it does seek a bailout, it would become the fourth member of the 17-nation eurozone to get outside help since the continent's debt crisis erupted two years ago.
Investors and politicians are become increasingly concerned that Spain might not be able to find the money to prop its ailing banks by itself. As a conference call of finance ministers of the countries that use the euro got under way, a consensus seemed to be developing that Spain needs help and fast. But the amount of any rescue was still in question.
A new report from the International Monetary Fund estimated Spanish banks need a recapitalization injection of at least €40 billion ($50 billion) following a stress test it performed on the country's financial sector. That report came out early Saturday, three days ahead of schedule, underscoring the urgency of the situation.
Swedish Prime Minister Fredrik Reinfeldt, whose country does not use the euro and thus was not on the call, said there was talk of handing over as much as €80 billion. Others have said even more — up to €100 billion — is needed.
Reinfeldt, who spoke with national broadcaster Swedish Radio ahead of the afternoon conference call, called the situation "serious."
"In reality, we're talking about one of the greatest financial rescue operations the world has seen," he said.
Spain, as of Saturday afternoon, had not asked for help, "but we want to prepare if the call comes," said Guy Schuller, a spokesman for Luxembourg Prime Minister Jean-Claude Juncker, who chairs the meetings of eurozone finance ministers. Spanish officials neither confirmed nor denied a request for a bailout was imminent
A phone call earlier in the day among senior officials ended without a request from Spain, an EU official said. He spoke on condition of anonymity because he was not authorized to release the information.
Spain's Development Minister, Ana Pastor, did not tell reporters Saturday whether the country would ask for a bailout but said: "What we're working on at the moment is the recapitalization of the financial entities that need it, nothing else."
While Spain has said it is waiting for two independent audits — due by June 21 — before requesting a bailout, pressure is mounting on the country to act faster.
"The solution will have to be found quickly," Juncker told German public radio station Deutschlandradio.
In an interview published Saturday, the head of Germany's central bank, Jens Weidmann, called on Spain to tap Europe's bailout fund, the EFSF, to prop up its banks.
"If Spain is overwhelmed by the financing need, it should use the instruments created for that case," he was quoted as telling Germany's Welt am Sonntag paper. "The motto cannot be to avoid using the rescue fund at all costs."
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
It might be December but that is not stopping some people from "hanging 10" in Michigan.
A driver escaped safely after its vehicle crashed into the Grand River in Ottawa County Friday morning.
We get a brief break from the "lake-effect machine" Friday.