BRUSSELS - Agence France-Presse
Eurozone is ready to support Spain’s ailing banks, Eurogroup Finance Minister Jean-Claude Juncker says, as the rating agency Fitch slashes the country’s sovereign credit rating. Juncker refuses to discuss the amount of help that may be required
A man uses an ATM cash point machine at a branch of the Bankia bank in Madrid June 6. The Spanish economy is in recession for the second time in three years as damage from a housing bust persists. The eurozone will recapitalize Spain’s struggling banking system if asked, says head Eurogroup Finance Minister Juncker. AP photo
The eurozone will recapitalize Spain’s struggling banking system if asked, the head of the Eurogroup finance ministers, Jean-Claude Juncker, said on June 7.
“If it came to it and Spain asked for support for its banking sector, that would obviously be done,” Juncker said, while stressing that “as there is no request, it is too early to spend time on figures” for any financial aid.
Juncker, who is also Luxembourg prime minister, spoke as he left a conference in Brussels and just as Fitch Ratings slashed Spain’s sovereign credit rating by three notches to BBB, citing the country’s banking crisis, mushrooming debt and recession.Amount of help
Juncker refused to discuss the amount of help that may be required or the kind of vehicle could be used, saying Europe
was now in a critical period.
“We are in a real stress moment ... (we are) going through crucial weeks both for the EU and the single currency,” he told the closing debate at the conference.
“These are crucial days and weeks,” he added.
Spanish authorities have given themselves two weeks to take a decision on how to recapitalise their struggling banks which Fitch said needed up to 100 billion euros in fresh capital to cover massive losses. The International Monetary Fund is due to deliver its assessment of how much might be needed but a European Commission spokesman said the 40-80 billion euros reported by Spanish newspaper ABC, which cited an IMF
draft, was “irresponsible.” Juncker said it was important to “follow the timetable,” referring to a packed programme culminating in a summit of EU leaders on June 28-29, which had to be decisive to map out the way towards greater European integration.
“To come out of the woods in better shape than when we went in, we have to move in the direction of financial union, further deepening (the) economic dimension,” he said.
The time had come to tell Europeans, “whether they like it or not,” that integration was inevitable and that leaders are “resolute” in anchoring their shared future in the euro, -- Greece
included, as partners await a June 17 election to get its bailout back on track.
That integration would not only concern public finance planning, but also some “common tax receipts,” he said, in “confronting the great challenge that is our ageing population.” Juncker, along with EU heads Herman Van Rompuy and Jose Manuel Barroso plus European Central Bank chief Mario Draghi, are to report to the summit on what shape this closer union should take.
Spain said no decision had been made regarding a bank rescue and a spokesman for German
Chancellor Angela Merkel
declined to speculate on reports Spain was to request aid for stricken banks over the weekend, reiterating that the decision was Madrid’s alone.