May 19, 2020 / 4:42 PM / 12 days ago

Spain ready to approve new credit lines to help companies cope with COVID-19

A woman wearing a protective face mask and a visor is pictured inside a shop, as some Spanish provinces are allowed to ease lockdown restrictions during phase one, amid the coronavirus disease (COVID-19) outbreak, in Valencia, Spain May 19, 2020. REUTERS/Nacho Doce

MADRID (Reuters) - Spain said on Tuesday it would approve new liquidity lifelines to help companies and households weather the coronavirus crisis after releasing another tranche of the 100 billion euros of state-backed credit announced in March.

“If companies and the productive sector need more liquidity, the government will obviously provide the liquidity mechanisms that will keep them alive,” government spokeswoman Maria Jesus Montero said following a cabinet meeting.

Her comments come a day after the governor of the Bank of Spain called for an extension of temporary liquidity measures to support companies in the worst-affected sectors, such as tourism.

So far, the Spanish government has released credit lines worth 84.5 billion euros ($92.39 billion), including 20 billion euros released on Tuesday, of which 60 billion euros will go to support self-employed and small and mid-sized companies.

But banks, which are channelling these funds, as well as companies benefiting from the scheme have been complaining the loans are not granted fast and efficiently enough because of a lengthy authorisation process.

Of the total amount released so far, the state-agency Instituto de Credito Oficial (ICO) has guaranteed loans worth up to 38.6 billion euros.

When taking into account part of the risk assumed by lenders, the amount of financing through these credit lines is worth 50 billion euros.

As part of the scheme, the state is guaranteeing around 80% of the amount borrowed by self-employed workers and small and medium-sized companies if they do not pay the money back and up to 70% in the case of larger companies.

The guarantees cover new or renewed lending but not restructured loans.

Reporting by Jesús Aguado; additional reporting by Emma Pinedo; Editing by Inti Landauro and Alison Williams

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