Spain’s banks face external audits

International institutions will oversee an audit of Spain’s banks aimed at reassuring investors that bailout costs will not spiral as the prospect of new Spanish borrowing threatens to further inflame the eurozone crisis.

Spain announced a bailout of at least €9bn and full state takeover for troubled lender Bankia on Wednesday. Meanwhile, officials debated how to back regions that must refinance €36bn this year.

A government source said the ECB and IMF would oversee an external audit aimed at easing concerns over the health of the bank sector.

“You have to include them in a way because there is a significant amount of distrust placed by investors on figures provided by the Bank of Spain and the treasury,” Citi economist Guillaume Menuet said.

“It’s a bit of a double-edged sword, though, because if the figures turn out to be too optimistic it hurts their credibility.”

The aim of the external audits, due to be completed by mid-June, is to put a definitive number on how much the government might have to spend to shore up banks after forcing them to recognise €137bn in losses.

— Reuters

More in this section

News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up

Our Covid-free newsletter brings together some of the best bits from, as chosen by our editor, direct to your inbox every Monday.

Sign up