Osborne criticises Spain bailout

George Osborne has said the failure of the Spanish bank bailout is "depressing" as the banks had to be directly recapitalised into to convince the markets of its credibility. Spain's borrowing costs have hit the highest level for 13 years.

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Spain's economic misery will 'worsen'

Spanish Prime Minister Mariano Rajoy said recent decisions had been 'difficult' Credit: REUTERS/Juan Medina

Spain's deep economic misery will get worse this year despite the country's request for a European financial lifeline of up to 100 billion euros (£80 billion) to save its banks, Spanish Prime Minister Mariano Rajoy said.

Spain will stay stuck in its second recession in three years, and more Spaniards will lose their jobs in a country where one in every four are already unemployed, Rajoy said a day after the country became the fourth and largest of the 17 countries that use the common currency to request a bailout.

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G7 welcomes Euro zone's bailout plan for Spain

The Group of Seven developed nations has welcomed the euro zone's plan to recapitalize Spanish banks, saying it marked an important step toward more fiscal integration in the region.

G7 ministers welcome Spain's plan to recapitalize its banking system and the Eurogroup's announcement of support for Spain's financial restructuring authority.These steps represent important progress as the euro area moves forward on greater financial and fiscal union to reinforce monetary union.

– G7 statement

Lagarde: IMF ready to support implementation of Spain's bank bailout

Christine Lagarde, managing director of the International Monetary Fund (IMF), says her organisation stands ready to support the implementation and monitoring of the financial assistance for Spain's banks.

The willingness of Spain’s Euro Area partners to financially support the Fund for Orderly Bank Restructuring (FROB) with up to EUR 100 billion is a crucial step for the success of the Spanish authorities’ strategy.

This scale of proposed financing, which is consistent with the capital needs identified in the FSAP, gives assurance that the financing needs of Spain's banking system will be fully met.

– Christine Lagarde

European Commission welcomes Spain's bailout request

The European Commission has welcomed Spain's request for aid for its banks, made to the euro zone's finance ministers on this evening, and said it was ready to proceed "swiftly" with necessary assessments and propose appropriate conditions on the sector.

European Commission President Jose Manuel Barroso and Economic and Monetary Affairs Commissioner Olli Rehn said in a statement:

We welcome today's communication by Spain of its intention to request the support of the euro area ... and the Eurogroup's positive response to this.

With this thorough restructuring of the banking sector ... we are certain that Spain can gradually regain the confidence of investors and market participants.

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Spain will ask for cash to help struggling banks

Luke Baker covers eurozone news for the Reuters news agency:

Spain waits to ask for euro aid

Spain will make a request for aid from its euro zone partners, but not until it has a clearer idea of the amount of capital its banks needs from private-sector audits, three EU sources told Reuters today.

Spain indicated during a conference call of the euro zone's 17 finance ministers that it wanted aid for its banks but wouldn't specify the amount until Oliver Wyman and Roland Berger, two independent consultants, deliver their assessment of the capital needs some time before June 21.

"They want the aid, but they'll only say how much in a few days' time," one of the sources said.

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