Five senior EU and German officials said deputy finance ministers from the single currency area would hold a conference call this morning to discuss a Spanish request for aid, although no figure for the assistance has yet been fixed.
Later the Eurogroup, which consists of the eurozone’s 17 finance ministers, will hold a separate call to discuss approving the request, the sources said.
The dramatic development comes after Fitch Ratings cut Madrid’s sovereign credit rating by three notches to BBB on Thursday, highlighting the Spanish banking sector’s exposure to bad property loans and to contagion from Greece’s debt crisis.
“The government of Spain has realised the seriousness of their problem,” a senior German official said.
He added that an agreement needed to be reached before a Greek election on June 17. This could cause market panic and increase the threat of Athens leaving the eurozone if left-wing parties opposed to Greece’s EU/IMF bailout win.
The EU and German sources spoke to Reuters on condition of anonymity due to the sensitivity of the matter.
Spain’s deputy prime minister, Soraya Saenz de Santamaria, said the government needed to have at least a preliminary estimate of how much extra capital the banks needed before taking a decision.
The IMF is expected to announce imminently the results of its own audit.
“It’s important to respect the proceedings because it’s important to know the ground,” she told reporters, while not denying that the Eurogroup would hold a call on Spain’s needs.
If a request is made, Spain is expected to ask for help from the eurozone’s €440bn bailout mechanism, known as the European Financial Stability Facility. The amount will depend on the IMF audit and a separate report due by June 21 from two independent assessors, Oliver Wyman and Roland Berger.
Financial industry sources told Reuters on Thursday that the IMF report, to be made public on Monday, had estimated Spanish banks’ minimum capital needs at €40bn, rising to €90bn for a fuller recapitalisation.
Officials in Spain said the parameters for the IMF and the private-sector audits were effectively the same, meaning Spain could make the request for aid on the basis of the IMF figures rather than having to wait for the other assessment.
The eurozone has been under strong pressure from the US, China, Canada and other major partners to take swift, decisive action to prevent the debt crisis spreading.
President Barack Obama said European leaders appeared to be moving in the right direction, but he also emphasised that he was being careful not to tell Europe what to do.
Speaking in Berlin, German chancellor Angela Merkel said she was not pressing any country to take a bailout, saying it was up to Spain to decide what it wanted to do: “It’s down to the individual countries to turn to us,” she said.
Fitch said the cost to the Spanish state of recapitalising banks stricken by the bursting of a real estate bubble, recession and mass unemployment could be between €60bn-€100bn — or 6% to 9% of Spain’s gross domestic product.
The higher figure would be in a stress scenario equivalent to Ireland’s bank crash.
* Born: Jan 1950.
* Education: University of Madrid — economics graduate, 1973.
* Career: 1982-88, lecturer.
* 1989: Professor of Public Finance, University of Cantabria.
* 1993: elected to Parliament.
* 1996-2000: Secretary of state for the economy.
* 2000-2004: Budget minister.
* 2004-11: Opposition finance spokesman.
* 2011 to date: Budget minister.