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UPDATE 1-Spain to tap around 40 bln euros in EU funds for banks
November 26, 2012 / 2:31 PM / in 5 years

UPDATE 1-Spain to tap around 40 bln euros in EU funds for banks

* 37 billion euros would be for 4 nationalised lenders (Adds details from the Economy Minister)

BRUSSELS/MADRID, Nov 26 (Reuters) - Spanish Economy Minister Luis De Guindos confirmed on Monday that the country’s government would request around 40 billion euros ($52 billion) in European financial aid for its troubled banks.

“For the nationalised banks (...) the amount is going to be around 37 billion euros. In all, we are talking about 40 billion euros, which is the number we have always had in mind, about 3.5 percent of GDP,” he told reporters in Brussels.

The total takes into account a public capital injection for the bad bank and some limited capital needs for banks which have not been fully nationalised.

Spain was granted up to 100 billion euros of aid in June as part of a euro zone rescue fund to clean up a banking sector crippled since a property bubble burst five years ago. Newspapers and ministers have talked about an initial tranche of around 40 billion euros that had until now not been officially confirmed.

Bankia, which sought a 23.5 billion euros bailout from the state in May, is expected to take the majority of the bailout money. The other three already nationalised lenders are Novagalicia, CatalunyaCaixa and Banco de Valencia.

El Pais reported on Monday that apart from the 37 billion to be disbursed to these four lenders 2.5 billion euros would be injected to capitalise the recently-created bad bank, known as Sareb.

The newspaper said an additional 2 billion to 3 billion euros of European Union funds would be used for other banks that may need public money.

On Sunday, El Pais said European authorities would transfer 35 billion euros to Spain’s state bank rescue fund on Dec. 15 in exchange for massive lay-offs at the four nationalised banks.

This followed comments by Spain’s deputy economy minister Miguel Temboury last week that the country would probably tap less than 40 billion euros of aid from the euro zone rescue fund. ($1 = 0.7717 euros) (Reporting By Feliciano Tisera and Robin Emmott; Writing by Jesus Aguado; Editing by Clare Kane and Sophie Walker)

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