IMF: Spain Bank Bailout May Cost Under €50B


(ES) Spain expected to make aid request for its banking sector this coming weekend at EU conference call on Saturday, Jun 9th- Spain Government declined to comments on possible request for aid to its banking sector this weekend and stated that it would not comment until auditors completed its review on sector. Another Spanish government official stated was not aware of any pending announcement on bank rescue.

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(ES) IMF said to see Spain banking recapitalization needs under €50B (*Reminder: Other reports stated that the IMF forecasted Spanish banking sector needed €40-80B in new capital)

(ES) June 1, 2012 News Report – “… Spanish government promised Bankia a €19B bailout, although early on in the week sources indicated that Madrid would need an additional €30B on top of that to save its entire banking system.”

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How to interpret these headlines:?

Market is preparing for a Spain Bank Bailout Request this weekend although there are no official confirmations from the Spanish Government.  Sources early on in the week have confirmed that a minimum of 50B euro is needed for Spain to recapitalize its banking sector, although the actual number could be much higher than expected.  Either way, market has been trying to price in this new development and we are likely going to see further weakness in the Euro as markets open for trading on Sunday.

The key focus will be on whether a bailout request is made and how much… if it is more than the 50 billion expected, then market could react by selling more Euro… of course, if no bailout request is made, then we may see a bit more support for the Euro, but don’t be fooled into buying Euro because it is only a matter of time…  My view for the Euro is still to sell on rally as the overall fundamental for Europe remains bleak.

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About Henry Liu

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  1. […] G7 Finance Ministers would host a conference call on Saturday with the explicit possibility that Spain would make the bailout request… However, Spanish officials have adamantly protested that they must wait for the […]

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