Spain formally requested European funds to help bail out its struggling banks, the economy minister said on Monday in a statement.
Luis de Guindos, the Spanish Minister for the Economy and Competitiveness, said he wrote to Eurogroup President Jean-Claude Juncker to request financial assistance for Spanish banks in need of recapitalization.
Although de Guindos did not name a specific amount he required, he said it should be enough to provide banks with a safety buffer of capital, as well as just recapitalize, up to a sum of 100 billion euro.
De Guindos said Spain’s ‘Fund for Orderly Bank Restructuring’ (FROB) would be used to channel the bailout money to the country’s banks.
He added that the Spanish government planned to formalize all details of the proposed bailout by July 9, in order that it could be discussed at the next Eurogroup meeting.
In response to the letter, European Commission Vice-President Olli Rehn said he was “confident” the terms and size of the bailout could be agreed “in a matter of weeks”.
Rehn added that the bailout would be conditional on Spain continuing to tackle its public deficit, as well as restructuring both individual banks and its financial sector overall.
“There cannot be sustainable growth without sustainable public finances, both at national and subnational levels. Progress in these areas will be closely and regularly reviewed in parallel to the financial assistance,” he said in a statement released by the European Commission.
— By CNBC.com's Katy Barnato