Finance ministers of the euro zone on Saturday agreed to lend up to 100 billion euros to Spain in order to allow it to bail out its troubled banks.
Following a conference of more than two hours and half between the finance ministers of the euro area in a tense atmosphere, the Eurogroup and Madrid have said that the amount of aid would therefore sufficient to dissipate doubts.
“The loan amount will cover the estimated needs of capital with an extra margin of safety, which brings the estimated amount to 100 billion euros in total,” said the Eurogroup in a statement.
“The Spanish government declared its intention to seek European funding to recapitalize Spanish banks in need,” said the Spanish Minister of Economy, Luis de Guindos, during a press conference in Madrid. The amounts needed, he added, “are manageable and should amply cover all needs.”
Aid to Spain to recapitalize its banks brings the number of European countries affected by the sovereign debt crisis in the euro area and benefiting from a bailout to four.
The European Union and the International Monetary Fund has now raised approximately EUR 500 billion to fund the bailouts of Greece, Ireland, Portugal and now Spain.
Washington, who did not hide its concern that the crisis in the euro area jeopardize the recovery of the U.S. economy, welcomed the decisions.