Spain To Officially Request Bank Bailout For The First Time... Again

Tyler Durden's picture

If it seems like it was just yesterday that Spain officially requested a bank bailout, it is because it was. Recall: "Spain Caves, Admits It Needs European Bailout" from June 5. What happened next is confusing, but it essentially appears that Spain retracted the course of action as it was unhappy with two things: i) the market's response to the announcement, and ii) Germany's response to the request for aid. The first, because as ZH first showed, did not soar as there would obviously not be enough money embedded in the current system to fund a full bailout of Spain, and the second, because Germany is not exactly delighted with having one more country on the dole, and has yet to clarify under just what conditions it will save Spain (in retrospect naive rumors that it has dropped all conditionality notwithstanding). Which brings us to this morning, when we are expected to forget that all of this already happened, and to be shocked that Spain is officially requesting a bailout for the first time./.. again... kinda, sorta... Reuters reports: "Spain is expected to request European aid for its ailing banks at the weekend to forestall worsening market turmoil, becoming the fourth and biggest country to seek assistance since the euro zone's debt crisis began, EU and German sources said. Four senior EU officials said finance ministers of the 17-nation single currency area would hold a conference call on Saturday to discuss a Spanish request for an aid package, although no figure had yet been set. The Eurogroup would issue a statement after the meeting, they said. "The announcement is expected for Saturday afternoon," one of the EU officials said." So now we have rumors of statements of conferences of bailouts. Lovely. At least our Belgian caterer long is doing great to quite great.

More from Reuters:

The move comes after Fitch Ratings slashed Madrid's sovereign credit rating by three notches to BBB from A on Thursday, highlighting Spain's exposure to its banks' bad property loans and to contagion from Greece's debt crisis. "The government of Spain has realised the seriousness of their problem," a senior German official said.


He added that an agreement had to be reached before a Greek general election on June 17 which could cause market panic and lead to Athens leaving the euro zone if parties opposed to the terms of an EU/IMF bailout win.


The EU and German sources spoke on condition of anonymity due to the sensitivity of the matter.

Sure enough this being Europe, nobody actually knows anything:

In Brussels, the European Commission's spokesman on economic and monetary affairs, Amadeu Altafaj, said he could not confirm that there would be a teleconference of finance ministers and said Spain had made no request for aid. "There are no signs of a request," he said.


Well of course nobody will confirm anything: in Europe one only confirms horrible data on a market uptick. Sadly, this time around it seems they may not get it: as a reminder Spanish bank bailout costs have increased by 250% in about one week following yesterday's Fitch announcement, which for some idiotic reason cause the market to spike.

Fitch said the cost to the Spanish state of recapitalising banks
stricken by the bursting of a real estate bubble, recession and mass
unemployment could be between 60-100 billion euros ($75-$125 billion) -
or 6 to 9 percent of Spain's gross domestic product. The higher figure
would be in a stress scenario equivalent to Ireland's bank crash.


International Monetary Fund report, due to be published on Monday, is
expected to estimate Spanish banks' capital needs at a lower figure of
40 billion euros, but market conditions have deteriorated since the data
was collected, officials said.

And so on. Expect more talk, and no math. Why? Here's why.

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LULZBank's picture

 Germany is not exactly delighted with having one more country on the dole,

When your model is based on printing "money" then you need to have an outlet too, to get it out into the economy.

Complaints and criticism are just to show, they are not exactly printing money and also that the system coming off its seams cause of excessive printing.

Creation of wealth and prosperity is a bit difficult than printing money.

Beastmanager's picture

"If it seems like it was just yesterday that Spain officially requested a bank bailout, it is because it was. Recall: "Spain Caves, Admits It Needs European Bailout" from June 5. What happened next is confusing"


I tell you, first hand, why it seems confusing. The Germans do NOT want to bailout Spain and therefore are doing it the propaganda way: Make the world believe that the pride of the spanish is too big to allow them to ask for help. So what can we do? They do not want help... let them go kaputt on their own. Goebels will be proud...

SeverinSlade's picture

Spiderman towel idea must not be doing so well.

slackrabbit's picture only they had used the Silver Surfer towel idea - but  JPM killed it...lord knows why ;-)

SeverinSlade's picture

Rumors circulating of Twilight Breaking Dawn Part II lunch boxes being offered.

stocktivity's picture

Bernanke toilet paper may have been a more popular giveaway.

Josephine29's picture

After this mornings very weak industrial production figures from Italy will she be far behind?

So hardly inspiring and perhaps conforming to the theme of weak Italian economic growth but my point here is to show what can happen in a year and accordingly here is the equivalent data for April 2012.

In April 2012 the industrial production index seasonally adjusted decreased by 1.9% compared with the previous month. The percentage change of the average of the last three months with respect to the previous three months decreased by 2.5.
The unadjusted index of industrial production decreased by 11.9% compared with April 2011.


No doubt the official message will be move along there is nothing to see here!


Auburn's picture

So what was bullish on the 5th is bearish today .... retarded equity markets!  Is credit and ZH the only sane safe spots left???? 

DormRoom's picture

Not enough safe collateral to prop up the synthetic & shadow markets.

LongSoupLine's picture

"No soup for you!!" - Merkel

resurger's picture

is this funding gap the same as the funding gap which Basel III was showing? of course if we add the numbers up?

falak pema's picture

AMusing, when Hollande was in the US meeting O'bammy, late may, he made a statement saying that Spain needed formal aid for its banks. He got lambasted by Rajoy for putting his nose into Spanish affairs. Now three weeks later its official; time moves fast for these political shills as the water of market speculation rises to their knees...

Any guy named Alta-Faj has to be taken with a bit of skepticism and prudence, as by someone with a sweet tooth and empty belly when faced with good fudge. 

hugovanderbubble's picture

Popular is in default


hugovanderbubble's picture

The only solutions are:


1.Accept Debt Haircut from 5 to 20% in spanish governement and subgovernment bonds

2.Accept Leverage in ESM-EFSF-IMF AID to fill the financing needs gap.

3.Accept Real Estate Loans Losses -.REAL¡¡¡¡¡ 

-Asset backed Securities has destroyed completly spanish system .(MBS)

now Taxpayers will have to deal with it.

Nationalizations coming, 

End of the Corruption


Spanish 10yrs Bond will suffer a big haircut remember Portugal Contagious effect and similar debt haircuts to be applied.

Just a matter of time.

Dont Trust any Roland Berger and Oliver Wyman Audits/DD * All Tricked to avoid massive default.


BANKSTERS youre dead.

youngman's picture

And what makes it even more funny...these Banks PASSED the stress

stocktivity's picture

...and they'll pass next time also..It's all Bullshit!

jeff montanye's picture

the line in the post that rang truest to me was that the belgian caterer longs were doing great to quite great.  a huge amount of this governance and financial malpractice is the mutual support of corrupt bankers funding the campaigns of corrupt politicians who in turn repay the money to them a thousand fold (from the public till) in bailouts (which never actually bail anyone out for keeps).  it's a defense of corruptly opulent and powerful lifestyles at the expense of the rest of the world.

Zgangsta's picture

All civilized gentlemen will let their playing partners call a mulligan.

Dorky's picture

ZH seems to be taking both sides of the same coin - it will have articles that talk about pro-QE and articles about anti-QE. Then if either one of it is fulfilled, ZH will use the related articles to claim its "high" predicting accuracy. Am I right about this?

SonOfSoros's picture

I feel quite bad for the Spainards especially when they are turning so desperate to the extent of offering Spiderman(Well, even a superhero can't save you now) towels.


I kind of wish they took the Greek non-chalant approach so that I can laugh and mock their decisions while profitting from it. Now it is coming across as pathetic.

Olympia's picture

How is it possible that the European Union allows the weak states to enter the international money market and borrow the money they need without help – based on their own potentials? How is it possible that the “chain” of interests of euro can let its weak “links” exposed to outside pressuresHow is it possible for a “herd” with common interests to let each “ship” defend itself against the wolves, without help, and its general security threatened? How is it possible for Greece, which represents a minor 3% of the Eurozone’s economy, to be allowed to threaten the other 97% of that economy, due to the latter’s weakness?

The European Union should be the one borrowing from the national banking system – thus dealing with profiteers itself based on its overall potential – not its weak “links” alone. The latter should be under the EU’s protection and constant monitoring. They should borrow from it at a subsequent time and if they became victims of profiteering, the problem should be kept in the bosom of the euro. Domestic profiteering should bring profits to Europe’s influentials, therefore bring profits in the euro area, and not threaten it.

From the Wall Street Crash of 1929 to the Global Financial Crisis of 2007

Sean7k's picture

I wonder if the bankers have forgotten a key consideration: if the value of money/credit becomes unknowable, people with real goods either stop producing or stop selling for said considerations. They move on to other value instruments. 

The only way to protect yourself as a producer is to demand real value in exchange for real goods. What will the bankers do with their worthless fiat then? Demand the enforcement of legal tender laws? 

That is when people stop producing anything except what they can deal on black markets or use themselves. 

No police state is large enough to contain all the people. 

By drips and drabs, the conclusion comes. 

The bankers will have to create a new value instrument and a rational for it. Will we accept the new chimera as a delivering god or finally see the light? 

eclectic syncretist's picture

Spain takes a mulligan. 

Don't worry though, the stress tests the Fed did showed that even if we hit 13% unemployment, plus a 50% drop in the stock market, plus another 20% drop in housing, all the big banks will "continue to meet supervisory expectations for capital adequacy".

Translation: "If they screw up again we'll just get Congress to approve bailing them out again, and you the taxpayers will suffer the inlationary consequences.  We didn't really fix anything except maybe a little public perception."

timbo_em's picture

Whlie I largely agree with respect to the whloe situation in the Eurozone, I think that those numbers in the chart a not totally correct. Afaik the EFSF has a volume of 440bn at Aaa and max volume of 500bn but the EFSF is set to expire in 06/2012.

However, 36.7 percent of that amount is or rather should be contributed by the PIIGS (Italy's share is 17.9 percent). The same goes for the ESM. So just a little less than one fifth of the EFSF and the ESM is already highly in question. And I'm sure the Italy will hit center stage later this year.

e-recep's picture

the next step will be replacing the spanish prime minister with a goldman sachs alumni.