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EU calls time on Spain's bank bailout

AFP/The Local · 31 Dec 2013, 11:35

Published: 31 Dec 2013 11:35 GMT+01:00

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The support "has proven instrumental in recapitalizing and restructuring Spain's troubled banks, which are today on a sound footing," said Klaus Regling, head of the European Stability Mechanism, the fund set up to help eurozone countries at the height of the crisis.

"Spain's programme exit after one year is an impressive success story," Regling said in an ESM statement.

"Despite the challenges ahead I am confident that the ESM's support, combined with structural reforms, will allow the Spanish economy to achieve stability and substantial growth," he added.

In early 2012, it looked almost certain that Spain, crippled by banks over-exposed to a collapsed property market, would need a full international bailout as was the case for Greece, Ireland and Portugal earlier.

Madrid, however, refused to go down that path and instead managed to negotiate a deal with its eurozone partners worth up to €100 billion ($137 billion) in direct aid to fix the banks.

The ESM in the event needed only to pay out 41.3 billion euros as the Spanish economy, the fourth largest in the eurozone, stabilized despite massive problems and soaring unemployment.

"Spain will not request any follow-up assistance from the ESM," the statement said.

"Spain took the right decisions in difficult times," Spanish Finance Minister Luis De Guindos said in November, adding that the aid for its banks helped Madrid — labouring under enormous unemployment and a still-high public deficit — avoid a full sovereign bailout.

Also in November, EU Economy and Euro Commissioner Olli Rehn told a press conference after the talks that the Spanish financial market had stabilized, liquidity of banks had improved and deposits were rising.

Story continues below…

He said the key now lay in the restructuring of Spain's local savings banks.   

In July, Spain's top banking body, the AEB, said the banking sector had seen losses of €33 billion as a result of the crisis.

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AFP/The Local (news@thelocal.es)

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