Eurogroup Statement On Spanish Bank Bailout

Tyler Durden's picture

From the Consilium:

Eurogroup statement on Spain

The Eurogroup supports the efforts of the Spanish authorities to resolutely address the restructuring of its financial sector and it welcomes their intention to seek financial assistance from euro area Member States to this effect.

The Eurogroup has been informed that the Spanish authorities will present a formal request shortly and is willing to respond favourably to such a request.

The financial assistance would be provided by the EFSF/ESM for recapitalisation of financial institutions. The loan will be scaled to provide an effective backstop covering for all possible capital requirements estimated by the diagnostic exercise which the Spanish authorities have commissioned to the external evaluators and the international auditors. The loan amount must cover estimated capital requirements with an additional safety margin, estimated as summing up to EUR 100 billion in total.

Following the formal request, an assessment should be provided by the Commission, in liaison with the ECB, EBA and the IMF, as well as a proposal for the necessary policy conditionality for the financial sector that shall accompany the assistance.

The Eurogroup considers that the Fund for Orderly Bank Restructuring (F.R.O.B.), acting as agent of the Spanish government, could receive the funds and channel them to the financial institutions concerned. The  Spanish government will retain the full responsibility of the financial assistance and will sign the MoU.

The Eurogroup notes that Spain has already implemented significant fiscal and labour market reforms and measures to strengthen the capital base of the Spanish banks. The restructuring plans in line with EU state-aid rules and horizontal structural reforms of the domestic financial sector.

We invite the IMF to support the implementation and monitoring of the financial assistance with regular reporting.

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orkneylad's picture

The road to federal serfdom is paved with euros

TruthInSunshine's picture

Eurogroup statement on Spanish Bank Bailout:


"So...umm....yeahhh.  We're just waiting on Germany to write us the first of many, big, fat checks, mmkay?"

B-rock's picture

When do the unemployed Spaniards start bombing banks?

TruthInSunshine's picture

Addendum to Eurogroup Statement On Spanish Bank Bailout:


"Now, moving on, about this Italy question....we're hoping to complete some further analysis, and should have more details....ummm....hopefully soon. Mmmmkay?"

lakecity55's picture

Having lived there, I would not be shocked to see a resurgence of ETA and Catalonian separatism.

walküre's picture

The unions across Spain got this one. They're already using "home made" RPGs in fighting against the state.

Spain's revolutionary blood is hot and about to boil even hotter.

Leave it to the Spaniards to do something.

Divided States of America's picture

I dont understand this at all.

So Greece has no money and needed a bailout from the other EU members. OK. they got one, but thats still not enough because nobody wants austerity there.

Now Spain needs money from EU or IMF in which Greece is a part of. So Greeks are actually giving back money they received to bailout Spain?

If I am Italian, I would be downright steaming mad that we are bailing out Greeks and Spaniards and we get nothin??

I am sure Italy is next, wait a couple of months.And that bailout will be two to three times bigger than the one for Spain which is a few times bigger than the one for Greece.

And dont forget Portugal too.

Perfect timing since Euro 2012 is on right now and then the 2012 Olympics will be here this summer and they can tank the markets like they did right after the 2008 Olympics.

AldousHuxley's picture

Euro is Germany and France's way to realize empire ambitions.


Italy, Spain, Greece, Portugal are just pawns for German banks. They tried to use cheap labor in Europe's poorer cousins like US did with Mexico, but unlike Mexicans, Spaniards don't want to work in shitty jobs for shitty wages, so money just went to socialist services and Germany used eastern bloc countries for manufacturing.

So all of those countries have nothing to complain. They have memories of glorious past which they gained wealth from colonial profits and can't come to admit themselves that they have to stoop down to China's levels now without her colonies.


In regards to Olympics, central banksters don't tank the market after olympics, they prop up markets until the olympics by giving treasuries free spending money on infrastructure projects to build stadiums and apartments and such.

Greyhat's picture

"When do the unemployed Spaniards start bombing banks?"

The sooner the better. :-)

European revolutions against austerity will set us Germans free!

walküre's picture

"we will be most favorably in cashing in those cheques.. "

Buck Johnson's picture

Yea the finance ministers (did german finance minister say yea also?) can say yes to anything, but did Germany say okay and change their mind?

slaughterer's picture

This is all phrased in the subjunctive.  It is meant to please Obama and soothe markets.  Spain has not made  a formal request yet--will not until end of month, if at all.  Germany has not agreed, really.  Expect jubilation then disappointment.  

Soul Train's picture

It's another delay tactic. "MoU" ain't a bailout. The fat lady hasn't sung.


This is just another confidence scheme, buying time. So clever. And another form of a lie.

magpie's picture

"The loan will be scaled to provide an effective backstop covering for all possible capital requirements estimated by the diagnostic exercise which the Spanish authorities have commissioned to the external evaluators and the international auditors. "

PeeTee's picture

This bit is indeed hilarious and key.

WTF do they mean with that? An effective backstop for all possible capital requirements. And who exactly are the external evaluators and international auditors?

To me, a European living in Finland, this sounds like "we need a hell of a lot of money from someone who we'll blackmail, and some jerks who'll earn big-time on this bailout will tell us how much they want".


What a farce.

Caggge's picture

The funny part is the jerks who will earn big-time on this bailout are the ones who caused the problems that require the bailout!

PeeTee's picture

So true.

This whole thing is just so fucked up.

There's also other banks in other countries in trouble. Remember Dexia in Belgium? That bad bank is smouldering underneath too.

Why, then, did Dexia not get support from eurozone, and Spanish banks do? Not that Dexia should have, it's just that eurozone apparently has two measures when it comes to small countries and big ones.

I guess I'll file for economic asylum in Turkey or something.

hamstercheese's picture

"This whole thing is just so fucked up."

Yep.  That's all that need be said - mathematically I'm thinking something like this:

(thing)sofuckedup = either 0 or infinity.  Probably goes towards infinity then explodes to zero.  Then we start again following the barter markets for food, water and medicine.


The Monkey's picture

Don't underestimate the Europeans will to hold the union together. Don't underestimate the ability of existing sovereigns to backstop the bailouts.

But, don't believe for a second that the recession in Europe will get much worse before it gets better.

Any big rip is an opportunity to short a market that has already topped out for the year.

Sudden Debt's picture

and for the confidence...

do you know why the meeting started at 16h.?
Siesta ends at 16h! No kidding!!

FreedomGuy's picture

My favorite part is how about 10 days ago and multiple times before we were assured by the PM himself no bailout would be needed. For all you delusional collectivist-statists I present this as the normal procedure of governments lieing until events force the truth. The biggest lie is that socialism/ collectivism can work anywhere with anyone. It always destroys the countries and people that try it. The USA will have its turn, too. The rest of the planet cannot bail us out. In fact, the multiple stupid bailouts will pull everyone else down. If the Germans decide to reconquer Europe I will consider it a collections action. God bless you Germans!

LULZBank's picture

The rest of the planet cannot bail us out.

Ofcourse we can. When we run out of our printed paper, you bail us out with your printed paper. Rinse, repeat.

But ahh the people who provided the raw materials and labour. Poor fuckers. They need to do more. Austerity maybe.

FreedomGuy's picture

I agree with you up to a point. That is what they will try. The problem is they cannot give the paper any real value without our cooperation. Hyperinflation is the result or a simple worldwide default.

SilverDoctors's picture

Eric Sprott says 100 billion euros is not nearly enough, and the ECB is majorly behind the curve here.


As most people know, there HAS to be a stimulus.   There’s going to be this meeting of the EU people over the weekend.  There’s been some wonderful work done about the size of the bank runs in Europe, and they’re just monstrous in size.  I’m sure that the shortfall in the Spanish banking system is going to be very AIG-like where one day the AIG losses were $40b, and the next day it was $60b, and the next day it was $100b, and three days later it was $185 billion and who knows how much it really was. I was sitting there and I asked someone, how many mortgages do they have? And they said, they have about a trillion.  I told them, well the hole will be about $400 Billion then because I’m sure all those things are 40% underwater! So this 100 billion euro suggestion (for Spain) is WAY below the number!   Of course it doesn’t matter what the capital deficiency is, how much of the money is leaving the banks?   When money leaves a bank, the asset theoretically, well, they’ve got to write a check,  but how do you write a check when you can’t sell an asset?   That’s why they have to keep getting bailed out.
It wouldn’t matter whether they had all of the capital in the world.  If every deposit leaves, the check they have to write is unbelievable.

resurger's picture

Funding Gapping hole to be filled


The Monkey's picture

Sprott is right, and it gets worse over a longer term. The consensus estimates have further housing declines in Spain estimated at about 15%, but, mean reversion requires closer to 35%.

This is only the first time of ad infintum that Spain will have to go to the till.

Indeed, the world can ill afford a global recession. Expect fiscal and monetary stimulus to be next up.

TruthInSunshine's picture

Don't fret because various governments, banks, pension funds, insurance companies, union funds and calPERS all say that average annual returns of 8%+ on capital, each and every year for the next 50 or so, will help to ameliorate what only now appear to be quite significant budget gaps.





*Even raging, full retard permabull Jeremy Siegel (who pretends that equity indexes aren't routinely and massively re-jiggered, that survivorship bias doesn't exit, and whose models of historical equity market returns are a casebook example of absurdum ad infinitum) blushes when he hears such talk.

B-rock's picture

The dominos will never fall. We'll all be enslaved, but the dominos won't fall.

Tirpitz's picture

A house of cards can be propped up only so long...

B-rock's picture

...but a hell of a lot longer than we have patients for.  It's already a fantasy system and there is much, much more wealth to be sucked out... It'll be years and years... and then they'll restructure it all in their own terms and it'll keep on going.

Tirpitz's picture

Fully agree with you. We better settle for paying much longer for this charace. But down it will come, and the later, the harder. And, most likely, when just about nobody expects it. Ain't that the Heisseberg Principle?

sunaJ's picture

You may be right, but I think you underestimate the velocity of money and the determination of hungry/homeless/hopeless people.

Tirpitz's picture

Emile Zola once said: "You can't free slaves which revere their chains." So there's little hope left to see the soccer-watching, beer-consuming masses stand up for a better future of their children.

There's a reason all the ongoing financial fraud is concealed in highly complex structures, so even many lawyers don't comprehend the details.

CrashisOptimistic's picture

Financial bullshit is simply not the killer.  Money is an invented concept, and so is the value in gold.  Governments will always have the ability to control by edict imaginary, invented concepts.

That is not what takes it all down.  Oil scarcity is.  That's what started this ball downhill and that is what will steepen the hill. 

Nothing else.  They can keep this going as long as they want because what they are manipulating doesn't exist in nature.  Oil does, and they can't create it, and that is what will unravel it all.

Tirpitz's picture

I'm with you on oil scarcity. Just -- the current banking malaise seems to have less to do with the dwindling natural resources, and more so with a 700 trillions in derivative debt sized house of cards where already one or two cards have been pulled.

skepticCarl's picture

Oil peak production is a long, flat plateau that will last years.  As oil become marginally more expensive, other fossil fuels, and alternative energy, and new energy technology will incrementally come on line.  Solar technology is advancing along many fronts, in many countries.  I will not be surprised when artificial photosynthesis becomes a viable liquid energy producing source.  The children of the 21 st century will be using multiples of the energy that their parents and grandparents use today.

B-rock's picture

It's way easier for them to kill demand. Aren't the "globalists" trying to elliminate the useless consumer? Any paradigm shift won't be in Joe-Sixpack's best interest.

John_Coltrane's picture

" I will not be surprised when artificial photosynthesis becomes a viable liquid energy producing source."

I actually do research in this area so I found your comment both naive and amusing.  I will be very suprised if it ever becomes viable-I certainly wouldn't invest my own capital-but other people's money-that's another thing entirely.   Its a scam to get grant money, write papers, go to conferences in exotic locations and get awards from other scientists who also work in the area (have done all of these).  Its interesting and challenging science, of course, but as a viable technology to replace fossil fuels, no way.  It costs more to produce the materials than one can ever get out in energy.   Sort of like the biofuels scam.

Nuclear fission is the only viable proven technology for large scale energy production.

JackT's picture

Close your turn around...TA-DA! Maaaagic!

CrashisOptimistic's picture

Exactly, see my comment just above yours.

Tirpitz's picture

Spain has already implemented significant fiscal and labour market reforms and measures to strengthen the capital base of the Spanish banks.

So, again, the common people have to suffer for the excesses of the banks. Why are no banking reforms instituted in such a process?!

RyanW525's picture

Zombies of europe...wake up from your football induced coma and realize your are enslaving yourselfs generations deep....

Manthong's picture

Unfortunately, one of the preconditions of becoming the walking dead is that you don't wake up..

Same problem here. 

TomGa's picture

"Financial assistance."  LOL !!

Financial RESCUE !! (But only if the German National Court agrees....)

If this goes through, Italy is going to be sucking hind tit.

Mr Lennon Hendrix's picture

Wow.  This is amazing.  Germany will respond favorably I assume.  As will the US, which funds 1/10th of the IMF. 

What a fucking shitshow the banking system is.