Germany confirms ‘troika’ to monitor Spanish assist

Germany confirms ‘troika’ to monitor Spanish assist

Germany confirms ‘troika’ to monitor Spanish assist

A journalist works in front of the Stock Exchange’s main display while it shows Bankia values, in Madrid. REUTERS photo

Germany’s finance minister yesterday stressed that billions of euros in aid to Spanish banks requested by Madrid would be overseen by European officials and the International Monetary Fund.

Asked whether Spain would avoid monitoring in the bailout, unlike previous deals with Portugal, Ireland and Greece, Wolfgang Schaeuble said: “No, there will be a troika in exactly the same way, that will of course monitor that the programme is being kept to.” “But this is only about a restructuring of the banking sector. That is the difference,” added Schaeuble in an interview with German radio. “While Portugal, Ireland and Greece are under macroeconomic adjustment programs, it is important they are monitored ... Spain does not need that,” he said.

 “It’s about Spanish banks, not about Spanish fiscal policy,” concluded Schaeuble. “But the restructuring of the Spanish banking sector must be negotiated separately and it must be monitored to ensure that it is being kept to,” he said.

On June 9, Spain clinched a lifeline loan of up to 100 billion euros ($125 billion) for its crisis-wracked banks.

The eurogroup of finance ministers said after the meeting that “following the formal request, an assessment should be provided by the Commission, in liaison with the ECB, EBA and the IMF,” referring to the European Central Bank and the European Banking Authority. Madrid has flatly denied the aid amounts to a bailout, with Economy Minister Luis de Guindos telling reporters that the loan did not amount to a rescue.

However, investors don’t appear to be sold on a rescue of Spanish banks. Stocks on Wall Street were only marginally higher yesterday after European countries said they would lend Spain as much as $125 billion. Stocks in Europe gave up some of their early gains, too.

Meanwhile, Greece can seek a better deal from Europe for its own rescue after Spain won lenient bailout terms, the main Greek parties said yesterday, a sign that however Greece votes this week it will be headed for a showdown with Brussels. The leftwing Syriza party said the Spanish deal proved that the austerity imposed by international lenders had failed. Conservative leader Antonis Samaras said the Spanish deal was proof that Greece had more to gain by negotiating with its European partners than by falling out with them.