The European Commission and the European Central Bank on Wednesday recommended that the Eurogroup of finance ministers authorize the disbursement of 39.5 billion euros ($51 billion) to recapitalize four nationalized Spanish banks, saying they have met the necessary conditions.
With the EC's approval of restructuring plans for Bankia, Novagalicia, CatalunyaCaixa and Banco de Valencia, the path has been cleared for the eurozone's finance ministers to approve the aid disbursement at a meeting Monday in Brussels.
The four nationalized banks will receive 36.97 billion euros in European aid. Nearly half of that total - 17.96 billion euros - will go to Bankia, while 5.43 billion euros will be disbursed to Novagalicia, 9.08 billion euros to CatalunyaCaixa and 4.5 billion euros to Banco de Valencia.
In addition to that aid package, a disbursement of up to 2.5 billion euros will fund the participation of Spain's state-backed FROB bank restructuring fund in the Sareb "bad bank," recently set up to take on Spanish banks' toxic real-estate assets.
That latter amount is still not definitive, European Commissioner for Competition Joaquin Almunia said Wednesday, adding that it will have to be confirmed by the European Stability Mechanism, the eurozone's new permanent rescue fund.
ESM sources on Wednesday were unable to provide the exact amount to be provided to FROB to fund its equity stake in the bad bank.
Spain was forced to request a loan of up to 100 billion euros ($129 billion) from its eurozone partners this summer to prop up ailing financial institutions, although Economy Minister Luis de Guindos said Monday that the country would only need to tap around 40 billion euros of that total, the vast majority for the four nationalized banks.
The Spanish economy remains hampered by the fallout from the collapse of a long-building housing bubble, which left many of its banks saddled with toxic assets.
The Iberian nation's unemployment rate currently stands at 25.02 percent overall and more than 50 percent among young people. EFE