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.