(AFP) – Jun 7, 2012
BRUSSELS — The eurozone will recapitalise Spain's struggling banking system if asked, the head of the Eurogroup finance ministers, Jean-Claude Juncker, said on Thursday.
"If it came to it and Spain asked for support for its banking sector, that would obviously be done," Juncker told reporters, although he stressed 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.
Juncker refused to discuss the amount 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.
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