BERLIN-The European Union's bailout fund is working on a euro 100 billion ($120 billion) package to prop up Spanish banks, according to a report Saturday by German news weekly Der Spiegel. A confidential draft plan by senior officials at the European Financial Stability Facility proposes an initial euro 30 billion payment to Spain at the end of July, the magazine said.
Of that, some €20 billion would go toward shoring up Spanish banks' short-term finances while another €10 billion would be reserved as a longer-term emergency buffer. Three further payments totalling €45 billion would be made in November and December of this year, and in June 2013, Der Spiegel said. A Spanish Economy Ministry spokeswoman declined to comment on the report. According to the report, up to euro 25 billion would also be made available to create a "bad bank" to buy up hard-to-sell debt.
This would be in line with a draft memorandum of understanding agreed by finance ministers from the 17 eurozone countries, which suggests that part of Spain's bank bailout should involve the segregation of billions in problematic assets to an "external asset management agency" to clean up Spanish banks' balance sheets.
AP
