By Dan Atkinson and Daily Mail Reporter
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Markets are braced for more turmoil tomorrow after Spain formally requested a rescue package for its struggling banks of up to €100 billion (£80 billion).
The move was announced by the Spanish economy minister Luis de Guindos at a hastily convened press conference in Madrid.
Mr de Guindos did not put a price on the bailout but said it would be ‘significantly’ more than the £32 billion suggested earlier by the International Monetary Fund.
Pain in Spain: The country's loss-making banks are thought to need anything from £32billion to £100billion
Sources close to the talks suggested up to £80billion or $125billion is likely to be offered.Spain had previously been hoping to hang on until at least the end of the month, by which time an independent audit would have been completed.
The further crisis comes as George Osborne prepares to use a keynote speech on Thursday to tell Brussels to keep its hands off Britain’s banks.
In his Mansion House address to the City, the Chancellor will urge the troubled single currency bloc to push on with fiscal integration rather than waste time thinking up ways to regulate Britain’s financial services.
His blunt speaking will come just days before a vital election in Greece next Sunday in which voters will choose between parties that support tough European Union bailout conditions and those that fiercely oppose them.
But the focus of the crisis has shifted to Spain, the EU’s fifth-biggest economy. Its loss-making banks are thought to need anything from £32billion to £100billion.
Any rescue would be likely to involve the eurozone’s bailout fund and the IMF, in a two-third, one-third split. Were Madrid to borrow this money in its own right it would mean a deterioration in the country’s finances, putting more pressure on Spanish bonds, ironically worsening the position of the banks that hold these bonds.
There is as yet no provision for banks to borrow direct from EU bailout schemes.
Osborne will also tell the assembled bankers and investors on Thursday the Government’s initial thoughts on implementing the recommendations of the Independent Commission on Banking, chaired by former Office of Fair Trading chief executive Sir John Vickers.
Unveiling the White Paper on banking reform, he is likely again to endorse key recommendations, such as forcing banks to separate their retail businesses from riskier investment banking.
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There was a report somewhere that part of the reason that Spain is in such deep trouble is that the autonomous regions went on massive spending sprees, and now most of them are broke. Thank God, that the regionalisation of Britain that Labour and Presscott had planned fell flat, or the country would have been left in an even worse state than it was. Another fiendish Labour plan that didn't work - just like everything they ever touched.
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The problem will be when the 80bn runs dry. The real figure is in the region of 1000bn. I supose this will buy a little time. I cant stop thinking the Spanish government are just full of lies and deceit. They had this coming. No hiding place for Italy. We are knocking on your door soon ...... The pot of money is not big enough, whats going to happen then ???
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There's no mention of when Spain expects to be able to repay these colossal sums again.In reality it's a gift to enable them to continue with a lifestyle they can no longer afford.
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Turmoil? The markets rallied last week, partly in the hope of such measures. Spanish Banks are being saved, therefore relief rally although that may not last
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Long or Short ftse100 for Monday ?
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Looks like Status Quo will have a re-release hit. Down Down deeper and Down
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Bet the greeks love the fact it is cheap loans without austerity - steven, blackpool, 09/6/2012 21:20 ---------- I would rather think the target for hatred is somewhat closer to home, with Barclays and RBS up to their necks in paella and the UK not paying a penny to this bank rescue fund.
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Greece blackmailed them into giving more money to spend, so now Spian wants its share who's next?
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Your comments:Hurrah, Euroempire is saved!
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steven, blackpool, 09/6/2012 21:20 I don't believe you know what you're talking about.
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