May 31, 2012
Just where the money required to bail out troubled Spanish banks will come from remains unclear.
By Neil Sen
The full extent of the huge problems facing Spains banks is becoming embarrassingly clear while the sovereign debt market continues to punish recession-hit Spain, making it still more difficult for the government to raise money to bail them out. Bank recapitalizations could amount to as much as 100 billion ($124 billion), according to some analysts. On May 30 the yield on Spains 10-year bond climbed a further 21 basis points to 6.66 percent, close to the 7 percent level which is widely regarded as unsustainable, before falling back on the afternoon of May 31 to 6.45 percent, even as Spains Economy Minister Luis de Guindos insisted the government would foot the growing bill for the banks. Both he and the European Central Bank denied rumors that the latter would indirectly help to fund a recapitalization of Bankia, the countrys fourth-biggest bank by assets.
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