EU throws 30bn euro lifeline to Spanish banks
Spain’s troubled banking sector secures a 30bn euro bailout following an emergency meeting of eurozone finance ministers.
The agreement followed nine hours of talks in Brussels that concluded in the early hours of Tuesday morning.
It was aimed at preventing Spain, the eurozone’s fourth largest economy, from needing a full bailout itself.
In June, European finance ministers agreed to set aside $150bn to shore up the capital base of Spain’s banks.
Madrid was also given an extra year to meet its steep budget deficit target, according to Jean Claude Juncker, Luxembourg’s prime minister and the head of the Eurozone finance ministers group.
Spain had been told to cut the difference between its income and spending to within 5.3 per cent of gross domestic product (GDP) by the end of 2012.
But it will now be given until 2014 instead of 2013 to cut its deficit to below 3 per cent of GDP.
“We are aiming at reaching a formal agreement in the second half of July, taking into account national parliamentary procedure, allowing for a first disbursement of 30bn euros by the end of the month to be mobilised as a contingency in case of urgent needs in the Spanish banking system,” Mr Juncker said in a statement to reporters after the meeting.
It comes as French President Francois Hollande will hold potentially combustible talks with Prime Minister David Cameron on Tuesday before meeting the Queen during a one-day visit to Britain.
Splits over City regulation, the euro crisis and high-income taxation are set to dominate the talks with Mr Cameron, who apparently snubbed Mr Hollande when he made an election-campaign visit to London in February.