Spanish borrowing at an all time high

Auditors said Spanish banks might need up to 62 billion euros in extra capital, to be filled mostly by a euro zone bailout, after Spain‘s medium-term borrowing costs spiraled to a euro-era record on Thursday.

Eurozone finance ministers met in Luxembourg to discuss how to channel up to $126 billion in aid to Spanish lenders weighed down by bad debts from a burst property bubble. Madrid’s economy minister said a formal request would be made in days for the bailout, which was agreed two weeks ago.

Many in the markets see the package as a mere prelude to a full program for the Spanish state, which Madrid vehemently denies it will need.

Spain‘s financial plight took centre stage a week before a European Union summit tackles long-term plans for closer fiscal and banking union in a bid to strengthen the euro’s foundations, after bailouts for Greece, Ireland and Portugal failed to end a debt crisis.

To pave the way, the leaders of Germany, Italy, France and Spain will meet in Rome on Friday.

Despite the assurances by leaders though, many still worry that as long as European leaders continue to stay lax on bank policies, events such as a run on the banks, both locally and nationally, still have a chance to occur

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Park Sae-jin swatchsjp@ajunews.com