News / Economy

Spain Denies Seeking Bank Bailout

Henry Ridgwell
LONDON - Spain's economy minister has been forced to deny reports his government is seeking international help to prop up its banks, as fears grow that many lenders are facing huge losses on loans.  Several banks in Europe's strongest economy, Germany, have also been drawn into the crisis.

Spain’s southern shoreline, the Costa del Sol, has long been a favorite on Europe's tourism map.  But alongside the beach bars and nightclubs are row after row of half-built, abandoned apartment blocks.

This is the center of a building boom that burst spectacularly with the global financial crisis.  Across Spain, banks gave billions of dollars to property developers trying to cash in.  They are left with huge debts.

The government is already nationalizing the ailing lender, Bankia, at an estimated cost of more than $25 billion.

Tobias Blattner is chief of economic research at Daiwa Capital Markets:

“Bankia is really just the tip of the iceberg, after all, because we know that they still have huge, massively bad loans on their balance sheets," said Blattner. "So I think they are in a very critical stage.  I think what we have seen is the approach that the Spanish government has taken so far was, in a way, not enough to convince the investors that Spanish banks are safe.”

Spain’s economy minister, Luis de Guindos, denied reports his country is seeking international support for its banks.

He stressed to reporters there was not a single question about an eventual rescue.
Spain wants to avoid following the path of countries like Greece and Portugal in tapping the European Union bailout mechanism, says Fidel Peter Helmer, a trader with Hauck and Aufhaeuser Private Bank.

Helmer says it would mean that Spain's sovereign rating would be further downgraded.  He says they want to avoid that because above all, the dilapidated banks are to blame for the misery.

The European Central Bank injected $660 billion worth of liquidity into the continent’s banking system in February.  That medicine appears to be wearing off.  Wednesday, six German banks had their credit rating downgraded by Moody’s because of fears of their exposure to bad debt.

Meanwhile, the European Commission is unveiling plans to avoid taxpayer-funded bailouts in the future.

Michel Barnier is commissioner for internal markets:

Barnier says in the banking sector, the commission wants more surveillance, more prevention and more caution.  He says it does not want taxpayers to pay any longer.
Those proposals would not come into law until 2014 at the earliest, and analysts say they do little to put out the fires raging in Europe’s banking system.

You May Like

Video One Year After Thai Coup, No End in Sight for Military Rule

Since carrying out the May 22, 2014 coup, the general has retired from the military but is still firmly in charge More

Goodbye, New York

This is what the fastest-growing big cities in America have in common More

Job-Seeking Bangladeshis Risk Lives to Find Work

The number of Bangladeshi migrants on smugglers’ boats bound for Southeast Asian countries has soared in the past two years More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs

World Currencies

EUR
USD
0.8957
JPY
USD
120.93
GBP
USD
0.6393
CAD
USD
1.2199
INR
USD
63.470

Rates may not be current.