BRUSSELS (MNI) – More clarity about the scale of Spanish banks’
recapitalisation needs would be needed before any talks about European
aid could begin, a spokesman for the European Commission said on
Wednesday, stressing that no such request had yet been made.

“First we need clarity; clarity means figures,” said the Commission
spokesman. “Only on that basis can we discuss with the Spanish
authorities in a partnership spirit the necessary actions to be taken.”

Current estimates vary so greatly that “it would be irresponsible
and not serious to speculate on the cost of any recapitalization needs
at this time,” the spokesman said.

Spain’s appointment of independent advisers to assess the needs of
the banking sector shows that Madrid is approaching the problem in the
right way, the spokesman said.

The advisers’ report is expected by the end of the month. “Only
after that can we discuss how [the Spanish banking authorities] intend
to proceed,” the spokesman said.

The spokesman’s remarks are the clearest sign yet from Brussels
that Spain could be headed for a bank sector bailout.

Spain’s prime minister Mariano Rajoy on Tuesday said that the
country was in “extreme difficulty,” and Budget Minister Cristobal
Montoro warned that the country was having difficulty obtaining funding
from markets.

The Commission spokesman also said that no request for aid had been
received from Cyprus, another Eurozone member struggling to support its
troubled banking sector.

EU officials in recent days have reiterated that the currency
bloc’s bailout funds cannot aid banks directly, but only via
governments, and in exchange for reform pledges.

Germany has also restated its opposition to direct aid for banks,
even as a growing number of policymakers elsewhere in the EU argue that
it would be the best way to help break the unhealthy dependence of banks
on their sovereigns.

Presenting his proposal for an EU framework to deal with failing
banks on Wednesday, EU Internal Market Commissioner Michel Barnier held
out the prospect that such aid could be possible in the future by saying
that EU lawmakers could amend the law on bank resolutions to create a
single European fund for failing banks, “if there is the political
will.”

The current proposal, which has been in the works since 2009,
requires only that national resolution funds lend to each other in times
of need.

The legislative proposal, which aims to shift the cost of bank
failures away from taxpayers to banks’ creditors by requiring them to
shoulder losses, has been presented as the basis for a first step
towards the sort of “banking union” that policymakers are now calling
for.

–Brussels newsroom: +324-9522-8374; pkoh@marketnews.com

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