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Spain asks Europe for help with banks

Wednesday, June 06, 2012 - 02:05

June 6 - Spain has appealed to its European partners to help revive its debt-laden banks, although EU sources say Madrid has not officially requested assistance and doesn't want political conditions. Joanna Partridge reports

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Spain's ailing banks have been at the centre of euro zone concerns for several weeks. Madrid had insisted it could cope alone - but now it says the banking crisis has pushed its borrowing costs to prohibitively high levels. The country's asking its European neighbours to help it recapitalise its banks. But Spain doesn't want to be forced into accepting an international bailout like Greece, Portugal and Ireland says Frankfurt trader Fidel Peter Helmer. SOUNDBITE: TRADER WITH HAUCK & AUFHAEUSER PRIVATE BANK, FIDEL PETER HELMER, SAYING (German): "Spain does not necessarily want to take advantage of the euro rescue mechanism because it would mean that Spain's rating would be further downgraded. They want to avoid that because above all, the dilapidated banks are to blame for the misery." Despite the concerns about Spain's escalating crisis, European shares rose slightly on Wednesday morning. Banking stocks also gained, on investors' hopes the European Central Bank might provide lenders with more cheap loans. There are fears lack of action could threaten the whole bloc. That was highlighted by Moody's Investors Service downgrading the credit ratings of seven German banks and Austria's three largest lenders. The one notch downgrade of Germany's Commerbank was mild compared to the cuts previously made to ratings of Spanish and Italian banks. But it shows the risks they face if the euro crisis deepens. The ECB is among those now calling for a banking union, says Paul Donovan from UBS. SOUNDBITE: Paul Donovan, Managing Director of Global Economics, UBS, saying (English): "What we've got now doesn't work. Moving towards a credible lender of last resort or a banking union is an absolute necessity and I think it's something that will have to evolve over the course of the next maybe three to six months." While a banking union may be a long term solution, Spain needs help now. And the euro zone is coming under increasing global pressure to move faster to help its fourth-largest economy. Joanna Partridge, Reuters

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Spain asks Europe for help with banks

Wednesday, June 06, 2012 - 02:05