Europe OKs up to $125B for Spain bailout
Europe agreed Saturday to allow Spain to tap a rescue fund of up to $125 billion to bail out its troubled banks, which are struggling under the weight of soured real estate loans after a Spanish housing bubble burst.
Spanish Economy Minister Luis de Guindos said the country will reveal how much money it needs in the coming weeks, after audits of its financial sector are completed.
Spain becomes the fourth country in the 17-nation eurozone to require a bailout after Greece, Ireland and Portugal. But comparing Spain's bailout to those received by the three other countries in the zone that uses the euro as a common currency is complicated.
Though the figure Spain is allotted seems large, it pales in comparison to the size of Spain's economy -- which is bigger than those of Greece, Ireland and Portugal combined and is the eurozone's fourth largest. The loans are also destined only for the banks -- not to prop up the country's own finances, as the previous bailouts were for the other nations.
While conditions will be imposed on Spanish banks that receive funding, de Guindos stressed that Spain faces no outside control of its public finances.
The terms of the bailouts for Greece, Ireland and Portugal included humbling visits by foreign financial monitors to make sure they are complying with macroeconomic rules imposed on their handling of their economies.
European leaders, economists and the continent's business titans said Spain had to find a solution quickly so that it will not be caught up in any potential market turmoil sparked by the Greek elections on June 17.
There are concerns that the anti-bailout left-wing party Syriza could become the largest party in the Greek parliament, putting the country's membership in the eurozone at risk. Syriza has vowed to pull Greece out of its bailout commitments if elected.