PM gives up no bailout mantra
MADRID, Spain – Spain’s Prime Minister appeared to have abandoned his insistence that the country’s troubled banking sector will not need an external bailout, as for the first time he avoided ruling out such an option yesterday.
Germany, meanwhile, without mentioning Spain by name, also gave its clearest hint yet that it thinks Spain should tap the European rescue fund before its banks become too toxic to handle.
Spanish Prime Minister Mariano Rajoy said he would wait for the results of an IMF report next week and then two independent audits before announcing how much the banking sector might need for recapitalization.
But for what seemed to the first time in public, he did not rule out the idea of the money coming from outside. Until now it has been his firm line that Spain’s banks, while hurting from an imploded real estate bubble and stuck with lots of foreclosed property and non-performing loans, would not need an external rescue.
“At that point I will give my figure and the government will say what the system needs to recapitalize itself,” Rajoy told a news conference, referring to how much Spain’s banks might need.
With that number in hand, and after consulting with European colleagues and officials, Rajoy said, “we will take the decision that is best for the overall interests of the Spanish people.”
German Chancellor Angela Merkel said Thursday after meeting with British Prime Minister David Cameron: “Considering the problems we are facing today, it is important to highlight once again that we have created the instruments necessary to support (countries) in the Eurozone, and that Germany is willing to apply these instruments whenever necessary.”
She added, “this expresses our firm political will to stabilize the Eurozone, so that the Eurozone can contribute to stable economic growth worldwide.”