MADRID Nov 14 Euro zone finance ministers
agreed on Thursday to allow Spain to exit an aid programme for
its banking sector in January without drawing more European
Spain last year took 41 billion euros of a 100 billion euro
package of aid to rescue a number of banks that were crippled by
bad loans from the collapse of a property and construction
bubble and to form a so-called bad bank to dispose of property
and loans whose value has plunged.
The rescue came as Spain's borrowing costs soared and the
country struggled to avoid following Greece, Portugal and
Ireland into a full bailout for government finances.
"The overall situation of the Spanish banking
sector has significantly improved, including the access to
funding markets of Spanish banks," the Eurogroup of euro zone
finance ministers said in a statement.
Ireland also chose on Thursday not to take emergency credit
lines as it exits a full rescue for its public finances.
Spain's government must still sell off three nationalised
banks, and may yet have to put more money into those to make
them attractive assets for investors.
Brussels will continue to monitor Spain's banking system and
public finances every six months until it has paid off 75
percent of the aid.
Spain has implemented stricter banking regulations, passed
reforms to make its economy more competitive and taken steps to
cut the public deficit - all as conditions for the bailout.
On Wednesday, Spain's parliament created an Independent
Fiscal Authority that will oversee budgets and the deficit,
which was the last outstanding condition on the aid programme to
Spain banks' borrowing from the European Central Bank fell
in October for the 14th month in a row, after spiking to record
high last year at the height of the country's financial crisis.
While Spain has fixed its damaged banks and has just emerged
from its second recession in five years, it still faces huge
economic challenges, including an unemployment rate of 25