* Official says if ESM helps bank, sovereign must give
* Direct ESM lending avoids pushing up national debts
* However, guarantees may be dropped "in the very distant
BRUSSELS, July 6 Any risks attached to financial
assistance given directly to banks by the euro zone's ESM
permanent rescue fund would remain the responsibility of the
country requesting it, a senior euro zone official said on
The official, speaking on condition of anonymity because of
the sensitivity of the discussions, said that if the European
Stability Mechanism were to take an equity stake in a bank it
would only be "against full guarantee by the sovereign
"There is some degree of mystification going on here ... in
the broader public who think that under current rules the ESM
could all of a sudden end up owning Bankia with the full risk of
Bankia on the balance sheet of the ESM," he said, referring to
the Spanish lender. "This is very much not the case.
"Does it still remain the risk of the sovereign or does it
become the risk of the ESM? It remains the risk of the sovereign
because you have the counter guarantee of the sovereign."
He later signalled, however, that this may change once a new
supervisory structure for banks were put in place.
"In the very distant future ... if we have a single euro
zone supervisor supervising all banks ... if there were to be
direct bank recapitalisation would this still require a counter
guarantee of the sovereign, my understanding is that it would
not," he said.
The official said that the benefit of lending directly to
banks would be that it would not add to the country's national
debt. "It cuts out the effect of that loan on the debt to GDP
(Gross Domestic Product) ratio for the sovereign," he said.
He said there would be a political endorsement of a rescue
for Spain's banks but no final agreement on Monday when euro
zone finance ministers meet in Brussels.