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Spanish bailout welcomed by world financial leaders

Key figures in the IMF, the US and the EU have all hailed the €100bn bailout – but Irish hopes for an opening have been disappointed.

Christine Lagarde
Christine Lagarde
Image: Charles Dharapak/AP/Press Association Images

THE EU DECISION to offer up to €100billion to bail out Spanish banks has been welcomed by financial leaders around the world.

Eurozone finance ministers yesterday confirmed that they would provide funding through the European Financial Stability Fund after Spain signalled its intention to formally request assistance.

The decision has met a positive response from senior figures in the IMF, Europe and the US as well as from finance minister Michael Noonan.

IMF head Christine Lagarde said she “strongly welcomed” the move, which she described as a “credible back stop to recapitalise weaker segments of the banking system”. She added:

This scale of proposed financing [...] gives assurance that the financing needs of Spain’s banking system will be fully met.

US Treasury Secretary Timothy Geithner also hailed the decision to offer assistance, saying: “We welcome Spain’s action to recapitalize its banking system and the commitment by its European partners to provide support.”

He said the bailout was positive as it formed a “concrete step on the path to financial union”, which he described as “vital” to the euro area.

Eurozone finance ministers yesterday confirmed that the debt for the bailout would be borne by the Spanish government, rather than directly by the banks.

This represents a disappointment to Irish hopes that Spain would avoid taking on extra sovereign loans, which would open a door for the Government to lobby for a similar deal on Ireland’s bank debt.

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However, the Sunday Business Post reports today that Irish officials will launch a “push” for a new deal on the outstanding €27billion in Anglo Irish Bank promissory notes.

European Commission president Jose Manuel Barroso and vice-president Olli Rehn issued a joint statement yesterday pledging that the Commission is “ready to proceed swiftly” as officials from Spain and Brussels hash out details of the bailout.

Read: Noonan welcomes Spanish request for banking bailout>

More: Spain will make a formal request for bank bailout of up to €100 billion>

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Michael Freeman

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