Spain asks for European financial aid for banks - New York News | NYC Breaking News

Spain asks for European financial aid for banks

BRUSSELS -- Spain's finance minister announced Saturday that the government will request European Union financing for the country's ailing banking sector, as the eurozone currency union hustles to contain the worsening financial crisis.

Finance Minister Luis de Guindos said the bank-aid conditions will apply only to banks, and the International Monetary Fund's role would be strictly advisory. He added that the final amount requested would be subject to the evaluation of the results of two independent consulting firms that are assessing the country's banking sector.

The announcement followed a conference call among eurozone finance ministers to discuss a commitment to provide as much as $125 billion (G100 billion) in support for Spain's banking sector.

However, the eurozone agrees that "quick and radical action" is needed at Spain's banking sector, which is reeling from a real-estate meltdown.

Eurozone officials said the draft statement, prepared before the ministers' conference call, mentioned G100 billion as the "top figure" of support that Spain could get, but that the exact size, form and time frame of a bailout for the banks was not yet decided.

Spain has been under strong pressure from the rest of Europe -- as well as international organizations like the IMF -- to request support for its banks before highly anticipated elections in Greece next Sunday. Many observers fear that the leftist Syriza, which has opposed the austerity program attached to the country's two massive bailouts, may emerge as a winner and that resistance to implementing the rescue program could eventually force Greece out of the euro.

Such a move could send further shockwaves throughout Europe and the wider financial sector, and officials want to prepare themselves for the fallout of the vote.

European officials said on Friday that Spain had accepted it needed the money, but was resisting conditions that other eurozone governments were insisting should be attached to the aid.