Spain’s banks may not survive without aid or bailout

A private sector solution is not likely amid fear of bad loans and recession, writes Sinead Cruise

Spain’s banks are fast joining the ranks of the most unloved in Europe, with many needing to raise capital urgently, deserted by investors who believe the country is on the brink of a recession that many lenders will not survive.

The Madrid government has ruled out more state aid for a sector that comprises a motley mix of international lenders and heavily indebted local savings banks. That leaves two options: raising private capital or turning to the EU for bailout funds.