Exclusive: Spain poised to request EU bank aid Saturday
By Julien Toyer and Stella Dawson
MADRID/WASHINGTON (Reuters) - Spain is expected to ask the euro zone for help with recapitalizing its banks this weekend, sources in Brussels and Berlin said on Friday, becoming the fourth country to seek assistance since Europe's debt crisis began.
Five senior EU and German officials said deputy finance ministers from the single currency area would hold a conference call on Saturday morning to discuss a Spanish request for aid, although no figure for the assistance has yet been fixed.
Later the Eurogroup, which consists of the euro zone's 17 finance ministers, will hold a separate call to discuss approving the request, the sources said.
"The announcement is expected for Saturday afternoon," one of the EU officials said.
The dramatic development comes after Fitch Ratings cut Madrid's sovereign credit rating by three notches to BBB on Thursday, highlighting the Spanish banking sector's exposure to bad property loans and to contagion from Greece's debt crisis.
"The government of Spain has realized the seriousness of their problem," a senior German official said.
He added that an agreement needed to be reached before a Greek election on June 17 which could cause market panic and increase the threat of Athens leaving the euro zone if left-wing parties opposed to Greece's EU/IMF bailout win.
The EU and German sources spoke to Reuters on condition of anonymity due to the sensitivity of the matter. Continued...