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

How to Safeguard Your Mobile Privacy

As the digital world becomes more mobile, so too do concerns about eroding privacy and increased hacking More

'Desert Dancer' Chronicles Iranian Underground Dance Troupe

Film by Richard Raymond is based on true story of Afshin Ghaffarian and his friends More

Obesity Poses Complex Problem

Professor warns of obesity’s worldwide health impact More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam Wari
X
Katherine Gypson
May 25, 2015 1:32 AM
For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.
Video

Video On Film: How Dance Defies Iran's Political Oppression

'Desert Dancer' by filmmaker Richard Raymond is based on the true story of a group of young Iranians, who form an underground dance troupe in the Islamic Republic of Iran. This is the latest in a genre of films that focus on dance as a form of freedom of expression against political oppression and social injustice. VOA’s Penelope Poulou has more.
Video

Video Turkey's Ruling Party Trying to Lure Voters in Opposition Stronghold

Turkey’s AK (Justice and Development) Party is seeking a fourth successive general election victory, with the goal of securing two-thirds of the seats in Parliament to rewrite the constitution and change the country's parliamentary system into a presidential one. To achieve that, the party will need to win seats in opposition strongholds like the western city of Izmir. Dorian Jones reports.
Video

Video Millions Flock to Ethiopia Polls

Millions of Ethiopians cast their votes Sunday in the first national election since the 2012 death of longtime leader Meles Zenawi. Mr. Meles' party, the Ethiopian People's Revolutionary Democratic Front, is almost certain of victory again. VOA's Anita Powell reports from Addis Ababa.
Video

Video Scientists Testing Space Propulsion by Light

Can the sun - the heart of our solar system - power a spacecraft to the edge of our solar system? The answer may come from a just-launched small satellite designed to test the efficiency of solar sail propulsion. Once deployed, its large sail will catch the so-called solar wind and slowly reach what scientists hope to be substantial speed. VOA’s George Putic reports.
Video

Video FIFA Trains Somali Referees

As stability returns to the once lawless nation of Somalia, the world football governing body, FIFA, is helping to rebuild the country’s sport sector by training referees as well as its young footballers. Abdulaziz Billow has more from Mogadishu.
Video

Video With US Child Obesity Rates on the Rise, Program Promotes Health Eating

In its fifth year, FoodCorps puts more than 180 young Americans into 500 schools across the United States, where they focus on teaching students about nutrition, engaging them with hands-on activities, and improving their access to healthy foods whether in the cafeteria or the greater community. Aru Pande has more.
Video

Video Virginia Neighborhood Draws People to Nostalgic Main Street

In the U.S., people used to grow up in small towns with a main street lined by family-owned shops and restaurants. Today, however, many main streets are worn down and empty because shoppers have been lured away by shopping malls. But in the Del Ray neighborhood of Alexandria, Virginia, main street is thriving. VOA’s Deborah Block reports it has a nostalgic feel with its small restaurants and unique stores.

VOA Blogs

World Currencies

EUR
USD
0.9109
JPY
USD
121.50
GBP
USD
0.6467
CAD
USD
1.2293
INR
USD
63.559

Rates may not be current.