Le need for recapitalization of Spanish banks are lower than expected. This was revealed by the director general of the International Monetary Fund: “It's good news – he said Christine Lagarde in an interview with the Wall Street Journal – The amount is lower than Europeans and Spaniards feared. The probable hypothesis is that it is closer to the forecasts made by the IMF than to the 100 billion euros put on the table so far” by the Europeans.
Last June, the Washington-based international institution had valued at 40 billion euros the amount needed by Spanish credit institutions.
Lagarde announced that an IMF report due out this month will demonstrate the accuracy of these estimates, but she also reiterated the need to swiftly implement recent decisions on banking supervision, because "what you do for fiscal, banking and politics is actually made for the Eurozone. It is necessary to show that investing today in ten-year bonds is actually a good project”.
Meanwhile, today the Financial Times writes in the opening of the newspaper that the European Union allegedly started secret talks with Spain. The goal would be the definition of a aid plan and the start ofpurchase of bonds by the ECB.
As a precondition, however, Brussels and Madrid are reportedly bargaining new economic reforms for the Iberian country. According to the British newspaper, the plan will be announced next week.
The Spanish Finance Minister, Luis de Guindos, would directly lead the negotiations with Europe. On the table there would be a series of structural reforms and not tax increases or further budget cuts, but it is not excluded that in the future the European Commission may request new austerity measures.
The preventive approval of the reform package by Brussels should facilitate the task of the Spanish premier, Mariano Rajoy, who has so far avoided asking for help from theESM, the new state-saving fund which will be operational from next month.
Yesterday the Treasury of Madrid has placed 4,8 billion 3- and 10-year bonds (more than the 4,5 billion that had been forecast), obtaining from the market the largest amount in the last six months. Demand was positive and rates fell. This morning the Bonos-Bund spread narrowed from 420 to 415 basis points, with 5,76-year yields at XNUMX%. The Ibex index of Madrid gains more than half a point at the opening.
