Spain's 100bn Euro Bank Bailout Is Approved
Eurozone finance ministers have approved an aid package for Spanish banks of up to 100bn euro, according to eurogroup sources.
Ministers of the 17-nation eurozone gave their green light to the unprecedented package during a telephone conference that lasted for nearly two hours.
The plan aims to restore confidence in Spain's financial system and avert a full rescue for the eurozone's fourthlargest economy.
One of the conditions involves the formation of a bad bank to take on foreclosed property, undeveloped land and bad loans to house-builders, in order to free up banks' balance sheets andget credit flowing once more.
Spain's banks are burdened with 184 billion euros of toxic real estate, equivalent to more than half of their total exposure to property after a housing bubble burst in 2008.
The approval of the much-anticipated injection of funds comes as the Spanish government releases the latest growth figures.
Spain's economy is expected to contract by 0.5% in 2013, after shrinking by 1.5% this year.
The revised forecasts will now be used as a base to draw up the 2013 budget.
The government also expects the economy to grow by 1.2% in 2014 and 1.9% by 2015, treasury minister Cristobal Montoro said.
At a media conference he said unemployment would be 24.6% this year before falling slightly to 24.3% next year.
It is forecast to further slip to 23.3% in 2014, Mr Montoro said.
The government's spending limit for the 2013 budget would be 127bn euro (£98.8bn), compared to a ceiling of 119bn euro (£92.6bn) set for this year's budget, while the costs of funding the country's debt are set to rise by 9.1bn euro (£7bn) in 2013.
He also said the Valencia region, one of Spain's most heavily indebted, has asked the government for liquidity.
The Ibex stock index fell 3.5% on Friday, while the 10-year bond yield rose 11 base points to 7.227% within an hour of the EU funding approval.
Meanwhile in Italy, the misery caused by financial crisis could spark a "civil war" in the southern island of Sicily, the mayor of regional capital Palermo said.
"Because of an explosive mix of despair felt by many families and the stranglehold of organised crime, a civil war could even break out," mayor Leoluca Orlando said.
"Sicily is the Greece of Italy," Mr Orlando, a member of the anti-corruption Italy of Values party and a staunch anti-Mafia champion, said.
"Many businesses are shutting, families on low incomes can no longer pay their electricity bills," he said.
what do you think?
Cant wait till Italy gets the begging bowl out. Anyone investing in eurobonds other than the ECB who are financed by er Germany which does have its own debt just not as much as every one else. Will have a hard time being convinced they will ever get there money back.
It could be the weather affected Spanish exports? Now I think of it, that happened to Italy, too? Spain had some big floods. It could really all be due to the weather. Even Germany has had bad weather? How has that affected their wine production? Even American farms have been badly affected by droughts and floods. Australia, also!
Let them sink, all banks should sink if that's what they have let themselves do.