‘Bank of Spain to blame for crisis’: EU chief

European Commission president Jose Manuel Barroso blasted Spain's central bank on Monday for glossing over problems in the country's banks before a near melt-down in the sector.

'Bank of Spain to blame for crisis': EU chief
"There were major errors in supervision here," Barroso (left) said, referring to Madrid's central bank. Photo: Jorge Zapata/AFP

The European Union extended Spain a €41 billion($56 billion) banking rescue loan in 2012 as the system groaned under the weight of loans that turned sour after a decade-long property bubble burst in 2008.

"Each time we asked how the banks were in Spain, how were the savings banks in face of the rumours in the market, the response was: 'Everything is perfect'," Barroso told an economic forum in Santander, northern Spain.

"There were major errors in supervision here," he said, referring to Madrid's central bank and criticising the tendency to blame the EU for its handling of Spain's banking crisis.

"It is easy to say that Brussels is to blame," Barroso said.

The head of the EU's executive arm said that while the bloc's response was "not perfect", it had nevertheless managed to show an "extraordinary resistance".

Partly in response to the eurozone's sovereign debt crisis, the European Union agreed to set up a new "banking union".

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From November this year, the new rules will give the European Central Bank direct supervision of the largest banks in the bloc, leaving the rest to each member nation's authorities.

"The crisis had as a consequence an unprecedented strengthening of the community's powers," Barroso said. "We have gone towards more, not less, integration."

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