EC: No provision to lend to banks without State bailout

The European Commission has said there is no legal provision in the European Stability Mechanism (ESM) to lend money directly to banks without going through a State bailout.

As news about the major recapitalisation of Spanish banks emerged, Spain's Prime Minister Mariano Rajoy brought forward proposals for banks to receive funding from the ESM, without tying the State to the debt.

The proposal was welcomed in Ireland, but spokesperson for Economic Affairs at the European Commission Amadeu Altafaj says there is no legal provision to access EU funds without going through the sovereign.