Spain to seek Eurozone aid for ailing banking system

Madrid, June 10 (ANI): Spain will ask for European financial aid for its ailing banking system, the country's finance minister has confirmed.

Spain's finance minister, Luis de Guindos, said that the country has not yet made a formal loan request, but a statement from the Eurogroup of finance ministers said it expected this 'shortly'.

The statement added that Eurozone partners were 'willing to respond favourably' to Spain's loan request and would agree to provide a loan up to 100 billion euros.

Madrid insists the Eurozone help for its banks is not a rescue, and not all banks need the money, Sky News reports.

Madrid has said it wants to wait until June 21 for the publication of two independent audits of its banking system to decide how much money is needed.

The Spanish acceptance of aid for its banks is a big embarrassment for Prime Minister Mariano Rajoy, who said just 10 days ago that the banking sector would not need any aid.

But Rajoy has admitted his government cannot afford to fund an estimated 40 billion euro (32bnpounds) bill to prop up the country's banks.

The International Montery Fund (IMF) rushed to publish its own analysis saying that Spain's banks need at least 37bn euro (30bn pounds) to cope with the slump in property values.

Spain is already struggling with rising discontent towards austerity with the eurozone's worst unemployment rate.

Unemployment among young Spanish people has reached above 50 percent.

The stress tests carried out by the IMF showed that while Spain's top two banks - BBVA and Banco Santander - remain solid, the rest of the banking structure is struggling.

Following Spain's announcement on Saturday, U.S. Treasury secretary Timothy Geithner welcomed the move, calling it an important step toward financial union. (ANI)