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.
An 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.