Bailout may save Spain's banks, experts believe

11 June 2012

Spain's banking system may be saved by the government's decision to seek a bailout package worth billions of euros, experts believe.

Over the weekend, prime minister Mariano Rajoy publicly admitted for the first time that the Iberian nation requires external assistance to help stabilize its ailing financial system.

Last week, the International Monetary Fund (IMF) estimated that Spain would need billions in aid to save its banks but the estimated figure put forward by policymakers in Madrid of up to €100 billion ($125 billion) was more than many analysts expected.

However, experts feel this sum will be sufficient to resolve the country's problems once and for all.

For instance, Luis Garicano, a professor at the London School of Economics, told Bloomberg: "Now that they have this money, it will hopefully finally be possible to recognize all the hidden losses and clean up the system."

Meanwhile, Andrew Benito, senior European economist at Goldman Sachs Group, added this is a "positive near-term development" for Spain.

By Gary Cooper

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